“The question, therefore, which must be answered,” says Purdy, “is whether the dominant mode of production in the USSR is capitalist or socialist.” (p.23)
Very well. What is a mode of production? It is, according to Marx, the economic structure of society, the sum total of the technologically conditioned relations of production. 
Relations of production means, of course, relations between people; more precisely it means relations between classes of people. Each historic mode of production has a characteristic dominant relation of production: slave and slave-master, serf and feudal lord and, what is relevant to our purpose, wage worker and capitalist. 
The characteristics of wage labour are outlined by Purdy as follows:
Under capitalism labour power is a commodity because the worker enjoys a double freedom. He is free in a sense which the slave or the feudal serf was not, to sell his labour power to any employer who is willing and able to buy it. But, he is also free in the sense that he is dispossessed of and separated from the means of production. That means that he has no real choice but to sell his labour power to some employer or other. It also means that he lacks directive power and control over the means of production. He must constantly face the consequences of decisions taken by the owners of capital and their agents. And in order to come to grips with the means of production to earn a living he must accept a subordinate role within the labour process. (pp.24-25)
Good. But isn’t this an accurate description of the situation of the worker in the USSR? He is free to sell his labour power to a wide range of employers, for there are many enterprises, but has “no real choice but to sell his labour power to some employer or other”. True, during much of the Stalin era the government of the USSR made strenuous efforts to deprive workers of their freedom to change jobs, but even under Stalin’s reign of terror these were only partially effective and have long been superseded by “normal” capitalist practice. 
Purdy may say “but there are no owners of capital. All modern industry, all big enterprises, are state owned.”
There are indeed no individuals with legal title to bits of Moscow Dynamo or the Leningrad Letro. But how does this affect the position of the worker?
He “lacks directive power and control over the process of production”. He is confronted by an employer and “must accept a subordinate role in the labour process”. He is in the same position as a worker employed by the National Coal Board or British Rail (which also have no shareholders) or for that matter as a worker employed by ICI or GEC – with this important difference: unlike the British worker he has no effective trade union rights.
The worker in the USSR, then, sells a commodity, his labour power, in the same way as a worker in, say, the USA. Nor is he paid in rations like a slave or in a share of the produce like a serf. He is paid in money. What does he do with this money? He spends it on commodities, on goods produced for sale (or, as Purdy has it, “articles or services produced for the express purpose of exchange on a market rather than for the direct use of the immediate producers or for administrative transfer to meet the predetermined requirement of some other producer or consumer.”). We mention this rather obvious point because Purdy is at great pains to emphasise that capitalism is a system of commodity production and implies, although he is not reckless enough to state, that commodity production has disappeared in the USSR.
In short, the dominant mode of production in the USSR includes, as an essential feature, wage labour; a wages system in the strict marxian definition of that term. That is indisputable, is it not comrade Purdy? But wage labour implies capital just as slavery implies slave holding (individual or collective).
Before examining the other pole of the wage labour-capital relationship in the USSR, capital, let us look briefly at the position of the producer under the socialist mode of production and then at his position under a workers’ state, a society transitional to socialism which necessarily bears more or less marked capitalist features.
Under socialism proper-or, as Marx called it, “the higher phase of communist society” – the distinction between producer and non-producer disappears along with the wages system (“Abolition of the wages system”, comrade Purdy may recall, was, for Marx, “the revolutionary watchword” , commodity production, money, the workers’ state and the residual class differences.
“In a higher phase of Communist society,” Marx wrote, “after the enslaving subordination of the individual to the division of labour, and therefore also the antithesis between mental and physical labour, have vanished; after labour has become not only a means of life, but life’s prime want; after the productive forces have also increased with the all-round development of the individual, and all the springs of cooperative wealth flow more abundantly-only then can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe upon its banners: From each according to his ability to each according to his needs!” 
It is very probable that Purdy regards this as the wildest utopianism.  If he were an avowed defender of capitalism it would be necessary to argue the matter; since he wears a marxist mask, we will leave the onus with him to correct’ Marx on this question.
A working class in power cannot introduce socialism by decree. Bourgeois right (in the original German the word – Recht – also means law) has an objective basis – scarcity and men moulded by scarcity – which cannot be abolished by edicts. The proletarian revolution is necessarily an abrupt and rapid overturn.  The period transitional to socialism, the period of workers’ states, is necessarily a prolonged period of gradual transformation of the relations of production and of the producers themselves.
In a workers’ state, or in a group of workers’ states, wage labour, commodity production, money and the rest persist, with diminishing force, for a period which may be quite lengthy – depending on world developments. So, therefore, does alienation, social inequality (within certain limits), the division between manual and mental labour and state repression (the function also of a workers’ state). In Marx’s words:
What we have to deal with here is a communist society, not as it has developed on its own foundations, but, on the contrary. just 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. 
But the trend, the direction, in a workers’ state is towards reducing the importance of these capitalist features, which it inevitably inherits. Thus, there is a progressive expansion in the range of goods and services which are supplied on a non- monetary basis-from public libraries, sanitation, hospital care, education (which are already, under developed capitalism in Britain, supplied in a distorted quasi-“communist” way – this is what Engels meant by “the invading socialist society”) to public transport, housing, basic foodstuffs, clothing and so on. And so to a progressive reduction of the importance of money and so to a progressive erosion of real income differences and so to the gradual “withering away” of the wages system, of commodity production and of the state. The workers remain wage earners but they are no longer, strictly speaking, proletarians.
They have political power and political and economic categories gradually fuse.
This development can, naturally, only go forward in a systematic fashion with a working class in power – in a workers’ state – although elements of it are to be found, as a product of the class struggle, in capitalist states, including Britain and the USSR. To speak in a “popular” and inexact fashion we could define the mode of production in a workers’ state as “state capitalism under democratic, collective, working class control, leading to a gradual erosion of the essentially capitalist features of the system and to the predominance of socialist features which ultimately undermine the basis of the workers’ state and lead to the emergence of the socialist mode of production.” This is clumsy but it will serve to point the contrast with the USSR and other “socialist states” of Purdy’s fantasy world.
For the central common feature of all these states, from the USSR and “People’s China” through to “People’s Albania” under the murderous mini-Stalin Enver Hoxha and the “People’s Democratic Republic of Korea” under the megalomaniac Kim Il Sung, is the subordination of the working population to the accumulation process and in particular to the expansion of the production of means of production at all costs.
Which brings us back to the role (and the rule) of capital in the USSR. Capital, it need hardly be said, does not consist, for a marxist, “of raw materials, instruments of labour and means of subsistence ... of products of labour, accumulated labour”. Capital is
... an independent social power i.e., as the power of a part of society, it maintains itself and increases by exchange for direct living labour power. The existence of a class which possesses nothing but its capacity for labour is a necessary prerequisite of capital.
It is only the domination of accumulated past, materialised labour over direct living labour, which turns accumulated labour into capital.
Capital does not consist in accumulated labour serving living labour as a means for new production. It consists in living labour serving accumulated labour as a means for maintaining and increasing the exchange value of the latter. 
The motive force of this “independent social power” is accumulation, the expanded reproduction of itself. As Marx puts it, the capitalist’s “own private consumption is a robbery perpetrated on accumulation”.
Moreover, the development of capitalist production makes it constantly necessary to keep increasing the amount of capital laid out in a given industrial undertaking, and competition makes the immanent laws of capitalist production to be felt by each individual capitalist, as external coercive laws. It compels him to keep constantly extending his capital in order to preserve it, but extend it he cannot, except by means of progressive accumulation. 
To summarise, and we apologise to readers for the necessity of expounding such elementary considerations at such length – a necessity arising from Purdy’s obfuscation of the matter:
Capital is a social power, a power exerted over the working class, which feeds itself and expands by the exchange of other commodities for human labour power and which is driven to reinvest the surplus value produced, to accumulate, to expand, as a condition of its continued existence. But, of course, there are no impersonal powers. A bourgeoisie – or a bureaucracy – acts as “the personification of capital” and is itself driven by what appear to it as “external coercive laws”.
Two things are essential for capitalism to function. Workers must be separated from the means of production, and there must be competition between the producing enterprises. If workers were not forcibly prevented from gaining control of the productive process they would have no reason for subordinating their own consumption to the needs of accumulation – they would produce for their own need. And without competition the capitalists would not be forced to accumulate. As in pre-capitalist societies they would have no motivation to do anything else apart from squandering the surplus on luxuries.
Obviously the first of these exists in an extreme form in Russia. It is more developed than in the west due to the increased powers of repression of a totalitarian police state.
But what of the second feature? Overwhelmingly it is the case that within the Russian economy there is centralised administration of production. Russia, considered purely on its own lacks the mechanisms for introducing this competitive element. As Cliff puts it: “The division of labour within Russian society is in essence a species of the division of Labour within a single workshop.” 
If any one capitalist enterprise succeeded in taking over the whole of the world economy, capitalism would have ceased to exist because there would be competition between capitals no longer. This would not be socialism, of course, but a new type of class society – one which Bukharin characterised as an industrial “slave-owning economy where the slave market is absent”. 
So if Russia were unaffected by the world around it, it could no longer be a society explainable by the laws of capitalism. But of course Russia has never been isolated from the rest of the world. As Lenin put it in March 1919: “We do not live merely in a state but in a system of states and the existence of the Soviet Republic side by side with imperialist states for any length of time is inconceivable. In the end one or the other must triumph.” 
The end of the Soviet Republic came in 1928 when the party had been strangled, the last vestiges of workers’ control eliminated from the factories, real wages slashed and a general speed-up introduced. Peasants were forced off the land to become factory fodder in the cities. The bureaucracy thus began a massive primitive accumulation of capital. The results were immediate. Investment in industry expanded by six times its 1923-8 level in the years 1928-33, and thereafter doubled in each of the two succeeding five year periods. 
Accumulation in the pre-war period was dominated by strategic and military competition with the west. This was even more true for Russia after the war. Between 1950 and 1965 approximately twice as large a percentage of the national income was spent on armaments as in the 1930s, even though the proportion of total income accumulated throughout the economy remained largely unchanged.  This made armaments directly responsible for around two thirds of all capital accumulation in this period.  Since 1928 therefore, not only has consumption been subordinated to accumulation, but the reason for this subordination is the competitive, coercive structure of world capitalism. It is not their own desires therefore, but the logic of world capitalism which forces the bureaucracy to accumulate.
We have just shown that the bureaucracy is driven to accumulate capital and in spite of their “robbery perpetrated on accumulation” through personal consumption on a scale far, far beyond that of the Soviet worker. This is the crucial question and no one with any inside knowledge of the history of the USSR since 1928 can be in any doubt at all that we have supplied the right answer.  Accumulation has been the central preoccupation of the bureaucracy ever since it destroyed the workers’ state and entered into competition with rival ruling classes.
“Catch up and outstrip” was the slogan of the Stalin era. Outstrip the older capitalist powers, not only in gross output but also in productivity of labour. “Why can and should and necessarily will socialism conquer the capitalist system of economy?” asked Stalin in a speech in 1935, and he answered himself, “Because it can give a higher productivity of labour.”  This grotesquely ambitious project was not then, and has not been since, realised or even approached. But the socialism’ which set it as a target involved a ruthless pressure on the workforce to extract every ounce of surplus value- for reinvestment. A little over two decades later Khrushshev was promising that the USSR would “outstrip” the USA in ten years (not achieved of course) and last year Brezhnev proclaimed yet another drive to enhance productivity – and so increase the rate of extraction of surplus value.
Purdy does not believe that the bureaucracy is forced to accumulate. Indeed he asserts that “to deny the reality of alternative policy options ... to imply that the outcome of the various debates over Soviet economic policy has been predetermined by the blind mechanisms of anarchic world economy, is not only false in fact, but also mistaken in principle” (p.29). Stalin, however, did not agree. “No comrades ... the pace must not be slackened!” he said in February 1931. “On the contrary we must quicken it as much as is within our powers and possibilities ... To slacken the pace would be to lag behind; and those who lag behind are beaten. We do not want to be beaten. No, we don’t want to ... We are fifty or a hundred years behind the advanced countries. We must make good this lag in ten years. Either we do it or they crush us.” 
We could go on, but there is little point. There may be room for argument about the mechanisms whereby the Russian bureaucracy is locked in competition with its bourgeois (and bureaucratic) rivals.  Only those who live in cloud-cuckoo land can doubt the fact that it is constrained, driven, to maximise accumulation.
The Russian economy, therefore meets the essential criteria of the capitalist mode of production. It is, of course, a highly peculiar capitalist economy, which is why, following Cliff’s usage, we term it bureaucratic state capitalism, a subspecies distinct from those other sub-species, state-monopoly capitalism and the now extinct competitive capitalism of the nineteenth century, but undoubtedly belonging to the same species.
“But all this is nonsense,” Purdy may argue (or if not Purdy, then his teacher). “Capitalism is a system of generalised commodity production which means that all products, indeed all elements of the labour process, take the form of commodities. This is plainly not the case in the USSR. Why, the very passage from Capital that you cite, plainly refers to competition between individual capitalists. There is none of this in the USSR; there is a planned economy.”
Indeed it is true that there is very little superficial resemblance between the economy of the USSR and Purdy’s model of nineteenth century capitalism where “Decisions about production are thus dispersed amongst a host of more or less autonomous centres” (p.22). But then, there is very little resemblance between Purdy’s model and modern Western capitalism either. Purdy has, without doubt, heard of the development of monopoly and state monopoly capitalism. But his knowledge of these matters has not been allowed to affect his analysis. He describes a capitalism, the competitive capitalism of the nineteenth century, which has everywhere long receded into history.
Why has the capitalism described by Purdy disappeared? Because competition is continually subverted by the accumulation process which it creates. The accumulation process increases the size of capitals as they confront each other, not only by ploughing back the surpluses, but also by reducing the number of independent owners of capital. Competition thus leads both to concentration and centralisation of capital.
As Marx long ago pointed out: “In any given branch of industry centralisation would reach its extreme limit if all the individual capitals invested in it were fused into a single capital. In a given society the limit would be reached only when the entire social capital was united in the hands of either a single capitalist or a single capitalist company”. 
Would such a system still be capitalist? Marx did not doubt for a moment that it would so long as there was more than one “national capital”, so long as competition, suppressed in “a given society”, still existed between “national capitals”, so long, in short as there was a world market and so long as the wage labour-capital relationship persisted inside the “single company”.
But isn’t this “single capitalist or a single capitalist company” controlling “the entire social capital” of “a given society” the government of the USSR?
Yes, indeed it is, in principle. Inside the USSR Ltd there is still commodity production so far as the central relation of production is concerned. The “company” buys labour power in return for other commodities. But apart from this central relation, commodity production is replaced, in principle, by “administrative transfer” – or notional sale for book-keeping purposes – just as between the various divisions of General Motors or ICI. If the planning mechanism were highly efficient, the USSR would indeed represent the “extreme limit” of centralisation of capital.
In fact, the planning mechanism is highly inefficient. There is a basic tendency in the USSR for managers to hoard factors of production. They do so in order to be able to meet the norms when they change (as they frequently do), and they standardly utilise illegal means which not only subvert the “plan”, but which also effectively prevent the central bureaucrats from gaining the information that they need to change the plan. One recent commentator notes “The use of tolkachi (expeditors), blat (influence), barter deals, illegal purchases. bribery, hoarding and concealing supplies, and the falsification of reporting.” 
The Russian press is obsessed with the problem. 28.8 per cent of goods in a recent survey were rejected because of low quality.  In a typical year, 1966, the average underestimate on production costs was found by Izvestia to be 32.5 per cent.  “Planning” in Russia frequently leads to greater fluctuations and uncertainties than the “unplanned” economies of the west normally experience.
All of which means that the USSR Ltd is a very inefficient capitalist concern (of which more later) but it is no less capitalist for that.
Purdy has another string to his bow. He speaks of “the positive achievements of the socialist countries, particularly where the socialist mode of production is unambiguously superior to capitalism” (p32). They are not socialist, but let that pass. Where is the “unambiguous” superiority of bureaucratic state capitalism over state monopoly capitalism to be located?
Economic performance? That is the popular myth. But here is what Mike Prior, writing in the CP’s official theoretical journal Marxism Today, has to say:
The basis of the Stalinist economy was extensive growth-that is the mobilisation of additional labour and raw material resources rather than the more efficient use of existing resources. As the rate of increase of industrial labour has slowed, and as new sources of raw materials have become more remote, the Soviet economy has found it very difficult to make the transition to intensive growth based on new technology. As a result Soviet growth levels have dropped to levels which are no better than those of many capitalist countries. (In fact, a good deal worse than some, notably Japan – PB, DH.)
Even these growth rates have only been achieved by devoting a much higher percentage of national income to investment, as opposed to consumption, than is usual in capitalist countries . . . Thus, the USSR invests about as much in real terms as the USA from a national income about half the size, and achieves a growth rate which has been much the same as the USA over the last few years ... It is a fundamental paradox of Russian society that it produces more trained engineers and scientists than any other country in the world, yet in terms of technological advance the gap between Russia and the capitalist states is growing rather than decreasing. 
Prior attributes the inefficiency of the Soviet economy to “the deadening of personal initiatives and the failure to allow proper freedom in the economic as well as the political sphere”.  But this “failure” is deeply rooted in the nature of the bureaucratic dictatorship and the alienation that results from it. It will not be overcome by reforms from above. No superiority here, comrade Purdy, is there?
What then, of the cold war? “If the social formations of East and West are simply different types of capitalism,” says Purdy, it is “extremely difficult to explain.” Come now, comrade Purdy, don’t you know that the two major capitalist powers of West-Central Europe, France and Germany, fought three major hot wars with one another in the course of a single lifetime of the proverbial three score years and ten? Does that mean that they represented different modes of production? Haven’t you read Lenin’s Imperialism? And what of that other cold war between the USSR and the Chinese People’s Republic which has now lasted fifteen years? Does it prove that the USSR and China represent different modes of production? Aren’t they, on your definition, both “socialist states”? Really, when an opponent is reduced to such exceedingly flimsy arguments, it becomes cruelty to pursue him further.
We have not dealt with all Purdy’s arguments, only the less obviously implausible ones. What remain have even less merit.
We have shown that in order to make a semblance of a case Purdy has had to throw the marxist theory of the state and of socialism out of the window, to juggle concepts, to confuse categories and generally to muddy the water.
All this, we suspect, is less to do with any great attachment to the view that the USSR is socialist than with a profound attachment to reformist politics in Britain, to a Bennite hankering after a British bureaucratically planned (capitalist) economy to be introduced by a “left Labour government” through the existing (capitalist) state machine and christened “socialism”.
That really is a reactionary utopia.
A copy of this article has been sent to David Purdy, together with an invitation to reply if he so wishes. Any reply received will be printed without alteration, although not, of course, without critical comment.
27. “In the social production which men carry on they enter into definite relations that are indispensable and independent of their will; these relations of production correspond to a definite stage of development of their material forces of production. The sum total of these relations of production constitutes the economic structure of society – the real foundation upon which rises a legal and political superstructure and to which correspond definite forms of social consciousness. The mode of production in material life determines the social, political and intellectual life processes in general.” (Marx, Preface to A Contribution to the Critique of Political Economy, in Karl Marx: Selected Works, Volume I, Martin Laurence, London n.d., p.356)
28. Note the word dominant. As Purdy insists with wearisome reiteration, there are no pure modes of production. It is true. Throughout the Stalin era there were millions of slaves in the USSR, yes slaves, comrade Purdy. But that did not make the USSR a slave economy in the scientific sense. Slavery, though widespread and of considerable economic importance, was not the dominant relation of production. The dominant relation was (and is) the wage-labour capital relationship characteristic of capitalism.
29. See Deutscher, Soviet Trade Unions, RIIA, London 1950, pp.87-93. As an example of the methods used, a decree of 28.12.38 enacted: “The worker’s right to a holiday with pay after five and a half months employment was abolished – henceforth holidays were to be granted only after eleven months of uninterrupted work ... The payment of insurance allowances to workers’ temporarily incapacitated was ... made dependent on the length of time during which the person concerned stayed on his or her job ... people who had left their jobs without permission ... were ‘liable to compulsory administrative eviction [from their dwellings] within ten days and without any living quarters being provided for them’.”
Theorists of the view that the USSR represents an entirely new mode of production, neither capitalist nor socialist, have stressed these restrictions (and the existence of slavery on a large scale) in order to argue, as logically they must, that the actual producer in the USSR is not a proletarian in the marxian sense.
But slavery virtually disappeared in the Fifties (and, as already noted, was never the dominant relation of production) and the decrees cited by Deutscher have long been rescinded. In any case, on this argument, the British worker was not a proletarian during (and for some years after) the second world war, when the rights to leave a job, or to refuse to accept direction to a particular job were abolished bylaw. Such deviations’ from the capitalist norm have been quite common in the history of capitalism and clearly do not affect the essence of the matter. The argument would hardly have been advanced at all but for the need to bolster untenable theories of “managerial society”, “bureaucratic collectivism” and so forth.
30. Marx, Value, Price and Profit, in Karl Marx: Selected Works, Volume I, p.337. Marx’s emphasis.
31. Marx. Critique of the Gotha Programme, pp.17-18. Those influenced by Tucker, Althusser and similar ideologues should note that this is not an effusion of the “young Marx”. It was written in 1875, eight years before Marx’s death and long after the alleged transition to the “mature Marx”.
32. “From the bourgeois point of view it is easy to declare that such a social order is ‘sheer utopia’ ... Even to this day, most bourgeois ‘savants’ confine themselves to sneering in this way, thereby betraying both their ignorance and their selfish defence of capitalism.” Lenin, The State and Revolution, in Collected Works, Volume 25, p.469.
33. So far as it is a matter of the destruction of a particular capitalist state. It is. of course, true that the revolution itself, which must necessarily bean international process (since capitalism created, for the first time, a world economy), can, and probably will, occupy an extended period.
34. Marx, Critique of the Gotha Programme, p.16. Marx’s emphasis.
35. Marx, Wage Labour and Capital, in Karl Marx: Selected Works, Volume I, pp.265-6. Marx’s emphasis.
36. Marx, Capital, Volume I, Progress Publishers, Moscow 1965, p.592.
37. T Cliff, Russia – A Marxist Analysis, London 1964, p.203. This is in principle. In fact the system is very much less efficient than this may suggest.
38. N. Bukharin, Imperialism and World Economy, Merlin, p.157.
39. Quoted in L. Trotsky, The Third International After Lenin, Pathfinder, p.13.
40. Cohn, Economic Development in the Soviet Union, 1970, p.71.
41. This note is missing in the original – MIA.
42. Schwartz, The Soviet Economy Since Stalin, Penguin – Gollancz, pp.45-6.
43. Ernest Mandel, from whose writings Purdy seems to have borrowed somewhat, at least understands better than his pupil the importance of this question and the necessity, for those who deny the capitalist nature of the USSR, to deny that the bureaucracy is constrained to accumulate.
Now the bureaucracy is not a capitalist class. It does not manage factories under conditions of universal commodity production. It is not in the process of competition with other capitalists. So it is under no economic compulsion to maximise output a even less economic compulsion to optimise resource allocation. (Mandel, The Inconsistencies of State Capitalism, IMG London 1974. Mandel’s emphasis).
If only Stalin, Khrushchev and Brezhnev had realised that they had made the historic leap from “the realm of necessity to the realm of freedom”!
Incidentally, where does “universal commodity production” exist today. In Britain? In the USA? Surely not Ernest.
44. Quoted by Trotsky in The Revolution Betrayed, p.63.
45. Quoted in I. Deutscher, Stalin, Penguin 1966, p.328.
46. The question is discussed in Binns, The Theory of State Capitalism in International Socialism 74 and, more fully, in Cliff, State Capitalism in Russia, Pluto Press, London 1974. Cliffs book deals with many problems for which we have no space here and is essential for a full understanding of the subject.
47. Marx, Capital, Volume I, p.627.
48. The “Reform” of the Supply System in Soviet Industry, Soviet Studies, July 1972, pp.97-8.
49. Jackson, Information and Incentives in Soviet Industrial Projects, in Soviet Studies, July 1971, p.17.
50. Jackson, op. cit., p.18.
51. Prior, Marxism Today, April 1976, p135. This article, a contribution to, the discussion of Gollan’s Socialist Democracy: Some Problems, is very frank and realistic. For further light on economic performance in the USSR see Mike Haynes, The USSR and the Crisis, in International Socialism 88.
52. Prior, op. cit., p.135. Prior’s emphasis.
Last updated on 22.10.2002