Ernest Mandel

Economics of the Transition Period


From 50 Years of World Revolution – An International Symposium, 1968.
Transcribed by Martin Fahlgren.
Marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

Aside from a few general remarks scattered through The German Ideology, Capital, The Critique of the Gotha Program and their correspondence, Marx and Engels did not develop any systematic views on the organisation of the economy immediately following the overthrow of capitalism. This was not an accidental omission but a deliberate abstention. The founders of historical materialism believed that it was not their task to formulate a ready-made schema of the future society because that society could only be the concrete result of the conditions in which it would appear. [1]

Although Marx and Engels’ attitude is understandable, one cannot help regretting it. For well-known reasons the overthrow of capitalism began in countries of a relatively backward industrial and capitalist development, while Marx predicted that the transition to socialism would result from the most advanced capitalist development, and in several key countries at once. Under these special conditions, the coming of a new society has replaced one conflict with another. It has substituted for the conflict between capitalist production relations and the productive forces, whose expansion they impede, a conflict between a more advanced mode of production and a development of the productive forces not yet corresponding to the needs of this progressive economic base. Instead of concentrating on a process of creating new productive relations and new norms of distribution, the leaders of the transitional societies have had to concentrate their efforts on expanding the productive forces themselves. The bureaucratic deformation and degeneration of the transitional society, resulting from the isolation of the revolution in one or several relatively backward countries, have already aggravated these new contradictions which Marx could only dimly perceive. [2]

According to the method Marx applied to the study of the capitalist mode of production, a systematic analysis of the general characteristics of the transitional period would be possible only with the appearance of this economy in its already mature and stabilised form. [3] It is unlikely that future history will consider the present economy of the USSR as this form – not to mention the other countries with a socialist economic base. It seems indeed possible to draw some economic conclusions from the already rich and varied experiences of all these countries. However, to systematise these experiences in the form of a general economic theory of the transitional period seems premature, if not impossible, both because of the absence of more mature forms of this economy and the difficulty of separating out what is peculiar to the specific context of its emergence in a backward environment from what corresponds to its deeper historical nature.

Any attempt to formulate an economic theory of the capitalist mode of production on the basis of the English and Dutch manufactures of the seventeenth century was likewise doomed to certain failure. The misfortunes of the Physiocrats who sought to formulate a general economic theory based on the reality of a still essentially agricultural France are well known, even though this agriculture served as the basis for an already advanced manufacturing, commercial, and financial capitalism.

But in the absence of a general economic theory of the transitional period – until such time as the overthrow of capitalism in several industrially advanced countries makes it possible to observe the functioning of an economy of this social type which has been freed from the necessity of carrying out primitive socialist accumulation [4] – a more systematic analysis of the principal experiences of economic construction in the non-capitalist countries is useful and necessary. It is useful because it helps to orient politically the revolutionary forces which are already confronted with comparable phenomena, or will be tomorrow. It is necessary because it enables us to make a Marxist critique of this new chapter in economic history untrammelled by conjunctural aspects and factional polemics. A certain number of objective problems and key options can be formulated which define to a very large extent the economic and social dynamic of the epoch of transition from capitalism to socialism in the less developed countries.

1. Socialism in One Country or Permanent Revolution

The first objective problem was the crucial historical dilemma confronting the Bolsheviks after the recession – which began either in 1921 or 1923 – of the first international revolutionary wave. The alternative before them must be correctly formulated because Stalinist falsification has created a great deal of confusion, extending to apparently bitter anti-Stalinists, in this regard.

Of course, there have always been ultra-left variants of fatalism, of mechanistic economic determinism of Kautskyist origin, for which the recession if not defeat of the world revolution inevitably meant a return to capitalism (private capitalism or state capitalism) in Soviet Russia. [5]

In their eyes the impossibility of completing the construction of socialism in one country became an impossibility to begin it. The holders of this theory have not distinguished themselves since that time by any special capacity to explain satisfactorily the dynamic and contradictions peculiar to the Soviet economy (which they seek vainly to reduce to the basic contradictions of the capitalist mode of production) or, above all, to integrate this analysis in an overall view of the worldwide class struggle. If one starts from the absurd premise that the victory of the Chinese Revolution was a victory for capitalism (!) or that the Vietnam war is a “conflict among imperialist powers,” it is difficult to comprehend what has been happening in the world for twenty years.

At no time did the Left Opposition in the CPSU, to say nothing of the International Left Opposition or the world Trotskyist movement that issued from it, share this simplistic view. For them the struggle against the myth of the possibility of completing the construction of a socialist economy in one country was precisely a struggle against all fatalistic and mechanistic distortions of Marxism. They understood that ultimately it was the struggle of antagonistic social forces that would decide the problems posed by the isolation of the first workers’ state. For this reason, the very people who opposed the Stalinist myth of “socialism in one country” were the first to advance an economic program of accelerated industrialisation and progressive collectivisation of the Soviet economy. [6]

There was no contradiction between their struggle to keep the Soviet state and the Communist International from impeding the progress of the world revolution – by incorrect tactical advice, wrong strategies, or the inadmissible subordination of the policies of the Communist parties to the changing needs of Soviet diplomacy – and their resolute desire to begin building a socialist economy in the USSR. On the contrary, these were only two aspects of the same basic strategy. Understanding that a conflict was inevitable between the socialist and capitalist forces both within the Soviet Union and abroad, the Left Opposition sought to create conditions as favourable as possible for this struggle by increasing the specific weight of the proletarian forces inside the USSR and internationally.

The verdict of history has proved them right. The thesis that manoeuvring among the classes can enduringly avert the outbreak of the inevitable struggle between antagonistic social forces has not been corroborated by experience. Both the conflict with the kulaks and with imperialism were unavoidable. All that the Stalin faction’s eclectic and short-sighted policy did was to create the conditions in which these conflicts could erupt by surprise, where the warnings of those predicting them would not be heard, and where measures aimed at gaining the best strategic positions for engaging in them were not taken in time. [7]

Historically, the problems of building socialism will be solved only by world revolution. It is only in this context that the disproportions, the distortions, and the most extreme contradictions will be definitively overcome. However, while awaiting the victory of this revolution – which the victorious proletariat has every interest in hastening by all means truly conducive to this end – the isolated workers’ state or group of workers’ states cannot be content to manage its current economic affairs in a makeshift fashion in anticipation of a change in the international situation. It must undertake the task of socialist construction, if only because this is the only way to reduce the influence of bourgeois and petty-bourgeois forces within its own society.

The answer that the theory of the permanent revolution provides for the question of what must be done in the event of an isolated victory of the socialist revolution in one or a small group of backward countries is therefore a combination of several elements. Its three primary components are: promote the extension of the world revolution, begin building a socialist economy, and develop socialist democracy.

2. The Survival and Disappearance of Market Categories

Immediately following the victory of the October Revolution, and especially in the period of War Communism, the Communist theoreticians saw the construction of a socialist economy primarily in terms of an immediate and general disappearance of the market and monetary economy. In Germany, various economists upheld analogous positions in the debates on how to carry out a socialisation of the economy which were coincident with the initial phases of the German revolution (above all the establishment of the Soviet Republic of Bavaria). [8]

However, the theoretical consensus changed with the beginning of the New Economic Policy (NEP), less with the aim of justifying the tactical turn than out of a better understanding of reality and a return to the Marxist tradition in this regard. [9] It appeared that particularly in the relations between agriculture (essentially private or cooperative) and industry, as well as between the workers and the state, maintaining money and market relationships was best suited to maximising economic growth and to the best defence of the interests of the workers as consumers.

The objective sources and theoretical explanation of these immediate lessons of experience were not clearly perceived by the participants in the Soviet economic debates of the 1920s. After the definitive victory of the Stalin faction, objective theoretical study was in every respect replaced by an apologetic pragmatism totally devoid of scientific value. It was thus that the well-known Stalinist formulas were arrived at that the law of value is an “inexorable objective law of socialist society” and that it remains valid as a result of the existence of “two different property forms: nationalised property and group property.” It is hardly necessary to stress the fact that these explanations have little in common with Marxist theory. [10]

Today we are better able to understand that the survival of the market categories in the period of transition from capitalism to socialism is primarily due to the inadequate development of the productive forces, which does not permit a physical distribution of all the goods produced according to the amount of labour furnished by each producer. The inadequate supply of use values keeps exchange value alive, inasmuch as it forces every producer to retain the private ownership of his labour power and exchange it for a wage which constitutes a certificate for the appropriation of a strictly limited but undifferentiated fraction of the whole of the mass of goods and services produced by society. Eliminating the commodity character of consumer goods would mean a replacement of this wage by precisely limited physical rations. This would inevitably lead to a revival of exchange (first of the products themselves then of the ration vouchers), because they would not fully cover the needs and because these needs differ in intensity for different individuals. In these conditions, maintaining the monetary standard permits the use of a tool of accounting and distribution which is at once more flexible, more equitable, and more inclined to respect autonomous decisions by the workers in the field of consumption. [11]

If real market relationships, based on a real exchange involving a change in ownership, thus govern the reproduction of labour power in the sphere of consumption [12], the use of monetary standards in the relations among publicly owned enterprises only assumes a market form without implying real market relationships. Since the production cost and sale price of consumer goods are calculated in money, it is simpler to make the same calculations for producer goods as well. The production costs of these goods could obviously be calculated in man-hours, and conversion tables between these man-hours and the monetary standard could be used to evaluate the input of raw materials and machinery in the cost of producing consumer goods. However, this method unnecessarily complicates accounting operations without in any way altering the reality of the production process or the circulation of the means of production and consumption in the country.

The survival of market and monetary categories thus proves inevitable during the period of transition from capitalism to socialism. But their survival entails a series of economic and social consequences which enter into contradiction with the imperatives of a society building socialism. Further on I shall examine the importance for social planning of this survival. At this point let me mention the most important social aspects. The survival of money and market economy maintains the old forms of alienation and causes new forms to arise besides. [13] Market and money relations are one of the main sources of the danger of bureaucratisation of the state and society. Being kept in the very centre of day-to-day life, the penchant for defending private interests encourages also the persistence and resurgence of a tendency towards private enrichment, etc., etc.

It is mechanistic, non-dialectical reasoning to assert that, since the survival of market categories is due in the last analysis to inadequate development of the productive forces, the latter must first be developed to the maximum – even by encouraging non-socialist motives – in order later, once there is abundance, to open up a general assault on individual selfishness. It is impossible to separate in this way economic and social processes which must be combined in order to produce a genuinely socialist society. I will not stop here to discuss the by no means proved assumption that “material incentives” and the “market mechanisms” alone make possible a maximisation of production and growth. It must, however, be stressed that there is no reason to anticipate that development of the productive forces will automatically facilitate the struggle against individual selfishness. To the contrary, it is more logical to suppose that basing economic management on private interest for decades will create a whole lopsided pattern of social behaviour that will be hardened when a higher level of productive development is reached. The economic and social experience of the USSR, East Germany, and Czechoslovakia over the past fifteen years confirms this assumption.

Marxist dialectics therefore requires that an economic policy which would not concede too much to short-sighted pragmatism ought continually to combine a tendency to retain the market categories as long as they are necessary with one of encouraging their disappearance as much as possible. The disappearance of these categories must not be conceived of as the result of a “single act” of society but as a progressive tendency, which must begin very early and then expand as the material and intellectual resources increase. I have analysed elsewhere the economic conditions which make possible this process of the withering away of the market categories. [14] It goes without saying that this process is guided by the selection of priorities (needs met by society without regard to individual effort or productivity), and this selection must be made democratically by the mass of the working population.

It is only by thus combining the use of the market categories with the promotion of their disappearance that the dialectics of ends and means is effectively implemented. In this way the practical habit of socialist relationships – without which the creation of a new society appears as utopia – is gradually produced.

3. Socialist Planning and the Law of Value

“Indeed no form of society can prevent the working time at the disposal of society from regulating production one way or another. So long, however, as this regulation is accomplished not by the direct and conscious control of society over its working time – which is possible only with common ownership – but by the movement of commodity prices, things remain as you have already quite aptly described them in the Deutsch-Französische Jahrbücher ...” Marx wrote to Engels on January 8, 1868. [15] This in brief is the fundamental contradiction between an economy governed by a conscious plan and an economy governed by the law of value.

An economy governed by the law of value is an economy in which production, and therefore investment, is guided by effective demand. What operates here primarily is not so much the difference in the intensity of different needs of different individuals; what is decisive is the difference in incomes. Thus production is directed toward satisfying the needs of the privileged layers first. Production of luxury items is stimulated before the elementary needs of the mass of the population are met. The rents for modern housing are left to the “law of the market” so that it is accessible only to the highest income strata. Since it is “unprofitable” according to the laws of the market which are operative at the level of isolated enterprises, social consumption (education, health, certain public services) is systematically sacrificed to more highly “profitable” individual consumption. For individual consumption is in the form of commodities produced to be sold at a profit. It is obvious that an economy ruled in this way moves away from socialism rather than towards it, even if this would make it possible to increase the economy’s rate of growth. The logic of such an evolution involves investment decisions being made more and more at the level of the individual enterprises. Production governed by the laws of the market accompanied by decentralisation in investment progressively reproduces the characteristic economic fluctuations of the capitalist economy, with phases of over-investment followed by phases of underinvestment, periodic unemployment, overproduction, etc., etc.

An economy governed by a plan implies, on the contrary, that society’s relatively scarce resources are not apportioned blindly (“behind the backs of the producer-consumers”) by the play of the law of value but that they are consciously allocated according to previously established priorities. In a transitional economy where socialist democracy prevails, the mass of the working people democratically determines this choice of priorities. Such deliberate selection of priorities is the only way to start the process of eliminating the proletarian condition and the alienation of the workers. This process is unrealisable both under the rule of an omnipotent and despotic bureaucracy, as in the Stalinist USSR, and under the rule of a more and more predominant market, as in Yugoslavia. A combination of bureaucratic despotism and the anarchy of the market cannot in any respect be considered a valid alternative solution.

A deliberate and conscious choice of priorities does not mean that economic accounting is “ignored” or “despised.” It means only that (1) this accounting is made in scientifically established production costs and not in sale prices; (2) these costs are integrated in an overall scheme of economic relations where no element is omitted [16]; (3) they not automatically guide investments.

Strictly speaking, costs could determine investment choices only in the case of “all other things being equal,” to use the formula of the neoclassical economists, which almost never happens.

In reality, far from promoting “economic rationality,” this confusion between the “law of value” and “economic cost calculation” – which leads to the absurd postulation of a “socialist market economy” that is currently in vogue in East Europe and the USSR [17] – steers further and further away from it and tends to combine the evils of the market economy with those of bureaucratic arbitrariness. No economy with a socialist base can tolerate a total reign of the law of value. Everywhere, and even in Yugoslavia, governments continue to dictate prices or more or less decisively influence their formation. Nowhere are selling prices “economically real” prices. A succession of distortions ensues from this which each new reform modifies or attenuates without being able to eliminate. Most importantly, as a result of these distortions, the economic reality loses its intelligibility and it becomes almost impossible to calculate real production costs. To eliminate these difficulties it is necessary first of all to institute a system of double bookkeeping on all levels which would separate real production costs from monetary calculations based on more or less arbitrary purchase and sale “prices.” This is the primary condition for the authorities at the centre and, still more important, the producers’ collectives in the enterprise being able to make knowledgeable decisions – that is, with the minimum indispensable information at their disposal.

In the historic sense, there is a basic contradiction between the principle of planning and the law of value. To Evgenii Preobrazhensky belongs the honour of having been the first to clarify this contradiction and to have formulated the fundamental economic law of the epoch of transition from capitalism to socialism – which is that of the progressive substitution of the principle of planning for that of the market. [18] The idea that this substitution has to be a progressive process further implies that the law of value cannot be “eliminated” at a single stroke in the society in transition from capitalism to socialism, any more than commodity production can. [19] It continues to govern in large part – but not completely or automatically – small commodity production in agriculture and the crafts. It continues thereby to influence – but not to govern exclusively – exchanges between the public and private sector. It influences likewise the allocation of total resources devoted to the production of consumer goods among the various branches producing directly for the “ultimate consumer.”

In this sense, but in this sense only, it may be said that the plan can “utilise” the “law of value” (more exactly, the market mechanisms) to facilitate a more rapid and precise adaptation of the supply of consumer goods to demand, which would take account of the elasticity of this demand both in respect to incomes (and their structure) and to prices (which the plan may have the ability to modify). This is the rational kernel of the Liberman reforms currently being applied in the USSR.

The market mechanisms are, however, not the only or the principal instruments which the plan can use to attain its objectives. Mathematical economic calculations [20], direct consultation of the consumers, discussion in rank-and-file assemblies can be utilised to the same end of balancing supply and demand. These often have the double advantage of making possible a more accurate and democratic representation of the desires of the citizens and of effecting economic adjustments before the fact rather than after, which greatly reduces waste and overhead expenses.

4. Rigid or Flexible Planning

Closely linked to the problem of the reciprocal relationship between the plan and the market is the question of the forms and methods of planning: rigid or flexible, centralised or decentralised. Debates on this have been very largely influenced and obscured by their habitual single initial point of reference – the Stalinist planning “model” – which is over-detailed and over-centralised. [21]

The evils of this “model” are innumerable. And I listed them at a time when it was not yet the fashion in official Communist circles to pillory them. [22] Moreover, we need not accept the thesis that this model “suited” the period of “extensive” industrialisation but that its utility ends when it becomes necessary to make the turn toward “intensive” industrialisation. Even before the second world war, to say nothing of the first postwar decade, the multiplication of more and more explicit and ever more contradictory norms in physical production, money costs, quality, “economy” of raw materials, the wage total, the number of man-hours, the type and range of production “imposed” on the enterprises tended to cause generalised disorder. The plan’s main objectives – which at that time were physical production goals – were most often realised only by violating the other norms, that is by outright negation of the plan (”black-market” purchasing of raw materials, recruitment of additional manpower, the appearance of illegal middlemen, etc.). Considerable waste resulted from this kind of economic management.

This Stalinist “model” was not simply the result of lack of experience, of errors of analysis in theory and practice, or of conceptual gaps. Neither was it the automatic or inevitable reflection of the country’s poverty or of the insufficient development of the productive forces. It reflected rather a certain social structure of state power in the Soviet Union. In the last analysis, the Stalinist model of over-centralised and over-detailed planning suited neither the needs of primitive socialist accumulation nor the interests of the Soviet Union as a great state. It suited the needs of a privileged bureaucratic caste and a “model” of political leadership which feared and systematically discouraged any critical spirit, initiative, or democratic discussion and which sought to give sole stress to the “virtues” of mechanical obedience or servility from the bottom to the top of the bureaucratic hierarchy and arbitrary arrogance from the top down.

The need to modify this planning model made itself felt not when it had ceased to produce results in the absolute sense of the word but when it had exhausted its usefulness from the bureaucracy’s own point of view. The successive reforms of this model (under Khrushchev first and then under the aegis of Liberman in the USSR, and the different variants in Poland, East Germany, Hungary, Czechoslovakia, Bulgaria, etc.) have tended to substitute automatic economic mechanisms, or “conditioned reflexes,” for “orders” from above. This has reflected a broadening of the regime’s base within the bureaucracy – the substitution of a technocratic and “economic” bureaucracy for a political party bureaucracy – but not among the people.

For as soon as the problem is seen from the standpoint of an efficiently. functioning socialist workers’ democracy, the dilemma in which the majority of the “reformers” in the East and their apologists in the West are trapped (and which is formulated as follows: either bureaucratic over-centralisation or the market mechanisms, arbitrary orders from above or automatic economic stimuli) is vitiated at its base. From the point of view of the mass of workers, sacrifices imposed by bureaucratic arbitrariness are neither more nor less “acceptable” than sacrifices imposed by the blind mechanisms of the market. These represent only two different forms of the same alienation. Even when certain sacrifices are objectively inevitable, they lose their bitterest edge only when they are the result of free debate and majority vote, that is, when they are freely consented to by the proletariat as a whole. [23]

The real answer to this false dilemma then is neither over-centralised and over-detailed planning on the Stalin model, nor too flexible, too decentralised planning along the lines of the new Yugoslav system, but democratic-centralist planning under a national congress of workers’ councils made up in its large majority of real workers.[24] This congress would choose among different planning variants and the majority of its debates would be public and with an opposition present. The planning authorities would be strictly subordinated to it. And it would have the right to abrogate after free discussion any decision made by an enterprise which would endanger the plan’s internal cohesion or execution.

In these conditions, the plan would completely abandon the detailed orders to the enterprises which were dear to Stalin, but conversely it would not turn to “material incentives” and “financial mechanisms” to carry out the bulk of its objectives. Large investments generally would continue to be decided on centrally according to an order of priorities democratically arrived at Only repairs and “small investments” would be within the province of the enterprises. The enterprises’ profitability would be promoted less by the quest for profits from sales than by an effort to lower costs without reducing quality. Supervision by the workers’ collectives would replace supervision by indices or “inspectors” sent down from above. The workers’ collectives would have a material interest in the results attained by the enterprises, but only within certain limits, so as not to accentuate income differentials within the working class. The workers’ initiative would be encouraged by their free association in decision-making at all levels (most importantly at the political level) rather than by their tediously participating in figuring out the details, which is demoralising in the long run (because it gives the impression of empty discussion, the results depending entirely on a series of factors over which the interested parties often have no control whatsoever).

5. Investments and Consumption

The objective source of all the particular problems and contradictions encountered by the countries which have abolished capitalism since 1917 lies ultimately in their need to carry out “primitive socialist accumulation” simultaneously with building a new society. This necessity arises out of the temporary isolation of the revolution in a relatively backward part of the world.

However, if this combination is in itself inevitable preceding the overthrow of capitalism in the industrially advanced countries, it by no means follows that a drop in the living standard of the masses or extreme restriction of improvements in private consumption are also inevitable during the phase of transition from capitalism to socialism, even in relatively backward countries. In fact, the coincidence of these phenomena with the beginning of socialist construction in the USSR and Eastern Europe, which was the result of the socio-economic policy peculiar to Stalinism, did immense worldwide harm to socialism. It identified socialism in the eyes of the masses of the West with a regime of bleak austerity and an uninspiring standard of living going hand in hand with often exorbitant privileges for the rulers.

The economic policy of the Stalinist bureaucracy was founded on two postulates: that the maximum rate of investment assured the speediest economic growth, and that the most rapid economic growth required giving an absolute priority to the development of heavy industry. These two concepts, however, do not stand up to critical examination from the theoretical standpoint, in particular because they disregard the repercussions on efficiency and labour productivity of various given levels of consumption for the producers. Their application in practice in the Soviet Union and in several so-called people’s republics has resulted in numerous planning errors, unfulfilled objectives, and manifold disproportions, and thus in needless and avoidable sacrifices for the peoples in question. The same or better results could have been obtained with lower accumulation rates compensated for by a more rapid increase in productivity owing to a sharper rise in the living standard of the producers.

Marxist theory and the practical experience lead to similar conclusions: the available resources cannot be arbitrarily divided between investment and consumption on the assumption that the highest growth rates will follow from the largest accumulation fund. More complex and subtle interactions, which are moreover theoretically calculable, arise between investment and consumption so that the economic optimum which produces the most rapid and most well-balanced growth will never coincide with the maximum rate of investment.

What is true from an overall standpoint is still more so for particular sectors. At most the masses’ spirit of sacrifice can be appealed to for a certain period with some success in order to gain their acceptance of certain restrictions on their consumption. But long-term reductions in food consumption and prolonged periods of housing shortages in new industrial centres inevitably provoke grave social crises which cannot fail to have a negative effect on the growth rate of labour productivity.

In reality the above-mentioned postulates are only the Stalinist theoreticians’ rationalisation of the grave political error committed by the Stalin faction in the CPSU and of its consequences, that is, of the Soviet leadership’s delay in launching an accelerated industrialisation. This delay forced the bureaucracy to skip over stages, that is, to take the resources to achieve the bases of heavy industry from the current consumption fund over a five or even a four-year period instead of an eight- to ten-year period. [25] In this way, the sacrifices of consumption imposed on the producers were significantly increased, and this in turn caused an investment return far lower than that estimated.

It must be understood that the principal productive force for building socialism is the productive power of increasingly skilled and conscious individuals. That is why all the “reproduction costs of labour power” (both the private-consumption funds and the costs of education, training, culture, and the democratic functioning of the economic and political system) can by no means be considered “losses” from the standpoint of investment or economic growth. Rather, from the socialist point of view they represent ultimately the most “profitable” investment.

6. Material and Moral Incentives

The problem of using material and moral incentives in building socialism must be examined at once from the macroeconomic and microeconomic standpoints, from the vantage point of society and of the individual. We have just seen that the growth rate cannot be tied to the investment fund alone. The absolute level of the producers’ consumption as well as the rate at which this level rises in turn affect economic growth. This means that from the macroeconomic point of view, regular improvement in the producers’ standard of living is a “material incentive” indispensable to building socialism. “Negating” it can only mean falling into voluntarism or setting the stage for serious difficulties.

This general statement, however, does not permit a solution of the problem; it only poses it. The real difficulty appears in going from this general problem to the specific one of the behaviour of the different classes, social layers, and individuals.

One other point, however, can be considered as established. In relation to small commodity production (agriculture and private craft production), there is little chance of obtaining increased output and above all of its being maintained over the long run if this is not accompanied by an increase in real income. If the state or the market regularly swallows up the peasants’ additional product or compensates them for it with a growing quantity of banknotes for which they obtain the same quantity of industrial commodities (consumer or producer goods), they will tend to fall back into a largely closed natural economy. [26] The increase in production will remain modest and will not give impetus to overall economic growth, except minimally.

Must the same logic be applied to the individual productivity of the workers? The least that can be said is that the historical experience is far from conclusive on this store. In fact, techniques like Stakhanovism resulted in creating a new division of labour within the labour force which increased the productivity of some by degrading that of others. It is improbable that the overall advantage was very great, especially taking into account the discontent which such formulas must inevitably produce in the working class and its negative effect on labour productivity.

This same observation applies to piece work and all the techniques of intensifying labour, the speed-up, etc. Indeed, for these techniques to promote productivity – leaving aside certain forms of constraints inadmissible in countries with a socialist economic base – the “material incentives” must be very considerable. However, these incentives are generally modest, if not marginal. In order for the expanded productivity to represent a net and not simply a gross gain, the increased depreciation of the labour force (including the additional cost of accidents, of more frequent illnesses, malnutrition, etc.) must be taken into account. The net gain will usually turn out to be unimpressive if not non-existent, to say nothing of the negative effects these techniques have on the unity and combativity of the proletariat.

For all these reasons, techniques that increase productivity by improving the technical level and organisation of labour, ultimately give far better results than those obtained by techniques of increasing individual productivity. And such techniques tall for little use of individual material incentives. They are furthered at most by collective bonuses or sharing in the supplementary results obtained by the enterprise. Such types of incentives, moreover, have the advantage that they favour the cohesion and internal solidarity of the working class – insofar, that is, as enterprise parochialism is resolutely combated.

There remains the evident necessity of promoting the technical and cultural education of the producers. Theoretically, this education ought not to be the source of material advantages once society has taken over its expense, once this expense is met by the collectivity and not financed by the producer himself or his family. [27] In practice the total absence of benefits would become a counter-incentive, if only because of the additional work and effort involved in the attempt to gain education.

Thus it can be considered that a bonus for education is justified according to the Leninist tradition in the matter, as long as it is understood that this difference in the remuneration of unskilled and very skilled labour, of manual and intellectual labour, brings with it certain dangers of degeneration for the society in transition from capitalism to socialism. [28] Every measure must be taken to reduce these dangers to a minimum: strict observance of the rule limiting the incomes of the party and state functionaries to those of skilled workers, a strictly limited proportion of higher-paid elements in the representative bodies, strict respect of the right of the rank and file to criticise and keep a check on these elements, access for the workers to all sources of information and means of education, socialist democracy in the political sphere, freedom of tendencies and for the establishment of parties basing themselves on socialism, freedom of discussion and of scientific, artistic, and literary creation, etc., etc.

The importance of “moral incentives” stands out all the more since “material incentives” for individuals are not very profitable economically in big industry and are socially counter-indicated. However, “moral incentives” – that is, the devotion of the masses to the revolution, their creative enthusiasm, their conscious participation in building socialism – cannot be maintained in the long run unless they are accompanied by an administration of the state and the economy based on these same masses. Lacking mass participation in the discussion and making of decisions, there is a danger that “moral incentives” will gradually be reduced to mere voluntarist exhortations with less and less effect on productive effort.

7. “Leadership by a Single Individual” or Workers’ Self-Management

In the Stalin era, the principle of “leadership of the productive process by a single individual” (edinonachalie), which Lenin advocated in special circumstances and which in principle was applicable to technical processes only, was gradually extended to all problems of economic management. [29] Even the counterweight of the trade unions was progressively eliminated, which had unquestionably existed in fact, if not by law, until the onset of the five-year plans. This postulate has not been challenged in the Khrushchev and post-Khrushchev period, despite the “de-Stalinisation” and a progressive reinforcement of the right of consultation exercised by the union leaders within the enterprises.

This system does not conform to the Marxist tradition in the matter. [30] It must necessarily result in a concentration of economic and political power in the hands of a bureaucracy on the one hand, and conversely in a lack of interest on the part of the mass of producers in the productive process. This deprives the work of building socialism of its potentially most powerful impetus.

It is, on the other hand, indisputable that the necessity of individuals submitting to a central authority, as Engels stressed, is confirmed by the evolution of technology, both in large factories and for the economy as a whole. There is no escape from this except by returning to individual craft production or by submitting to the much more alienating sway of the blind forces of the market. However, the inevitable subordination of the individual producers to a conscious centralising authority does not necessarily imply bureaucratism, authoritarianism, or despotism, once this authority is no longer designated from above and irremovable but is elected by the rank and file and can be recalled at the pleasure of the electors. Those critics who question the possibility of this, as I have pointed out elsewhere [31], in the last analysis confuse the social sources of power with the technical forms of its implementation.

“Those who control the social surplus product ultimately control the entire society”; this idea of Trotsky, which he took from Marx, implies that the control of a bureaucratic layer over society can be avoided only if control of the social surplus product remains firmly in the hands of the mass of the producers themselves. The election and recall of the leading body of the enterprises (the workers’ council) by all the plant personnel and the subordination of all technical and commercial officials to this body are the keys to real workers’ self-management.

The real social surplus product, however, does not emerge at the level of the individual enterprises but at the level of the overall economy. If the “associated producers” refuse to surrender to the central authorities a part of their right to dispose of the products of their labour, they will not increase but rather decrease their freedom of effective decision-making. For in so doing, they would in the long run subject themselves to the blind tyranny of the spontaneous forces of the market. In the last analysis, delegation by the workers of the right to dispose of this surplus product to a central authority (the congress of workers’ councils) – elected by the workers, on which they exercise a check, and whose composition they themselves can alter should disquieting signs appear – safeguards and reinforces the workers’ decision-making authority.

The right to manage the enterprise in which he works is one thing for the worker; the effective exercise of this right is something else again. It is always obstructed by survivals of the past (lack of culture and skill; major worries in other areas, primarily that of assuring his family’s daily subsistence; lack of interest due to lack of consciousness, etc., etc.). It is often blocked, moreover, by the socio-economic reality of the transitional period itself: insufficient information; lack of contacts with his fellow workers at the local, regional, and national levels; limits imposed on the freedom of inspection and discussion; and the excessive length of the working day. It is, in fact, these last factors which are ultimately decisive for the direction of development. When their obstructing role grows stronger, there is a danger that workers’ management will tend to become a snare. As these factors disappear, workers’ management will acquire ever greater reality.

The key factor is unquestionably a radical reduction of the working day which would make possible a real – and not fictitious – division of the day for each producer between direct production and social management activities in the broad sense of the word (not only at the enterprise level but in the community, the region, and the nation – both in the productive sphere proper and in the broader social, political, and cultural realm); this alone can assure the progressive integration of the production and accumulation functions.

8. Private Agriculture and Collective Agriculture

It is well known that the classics of Marxism were opposed to any forcible liquidation of small peasant ownership. The small peasant was to be integrated into the socialised economy only after he was fully convinced of its advantages. [32]

Engels did not suppose that the maintenance of a private agricultural sector in a socialised economy would create any serious problems for this economy. This is because he posed this problem for countries where industry was already capable of furnishing the countryside with a mounting flood of commodities and where this exchange between town and country would not permit primitive accumulation of private capital in any significant proportions, since the productivity of labour was higher in industry than in agriculture.

The experience of the Soviet Union and of the majority of the so-called people’s republics later, and of Yugoslavia and China, has shown that this question is much more complex in relatively underdeveloped countries where the peasantry constitutes the majority of the population. This experience confirms that any attempt to do away forcibly with small peasant ownership, either of the land or an important part of the products of peasant labour, can only have catastrophic effects on agricultural production. The drop in agricultural production in the period of “forced collectivisation” in the USSR, and later during the second phase of the Great Leap Forward in China, testifies to the inability of workers’ states to force millions of peasants to provide efficient agricultural labour when they find neither profit nor satisfaction in it. There were analogous experiences, if to a less catastrophic extent, in several East European countries in the nineteen-fifties, especially Poland and Hungary.

However, experience has also shown that an attempt to integrate an essentially private agriculture into a fundamentally socialised economy in underdeveloped countries inevitably creates growing tensions and contradictions which can threaten the very bases of planning and socialised ownership. These experiences of the NEP period in the USSR have been largely confirmed since in East Europe, especially in Poland.

When agriculture is entirely or basically private and socialised industry is still weak, the private peasantry is decisive in feeding the workers, since the economy is too poor to do so through imports. However, this peasantry is not homogeneous. Even in the wake of an egalitarian agrarian reform, it tends to differentiate rapidly into a rich, middle, and poor peasantry. Marketable surpluses show up only in the hands of the first two categories, and such surpluses more and more become concentrated in the hands of the kulaks alone; and they want to sell this surplus profitably. If industry is weak, surrender to this tendency means transferring a growing portion of the social surplus product to private capital accumulation instead of to socialist accumulation. [33] Resistance to this pressure in the same circumstances, however, mean running the risk of a “grain suppliers’ strike,” that is, famine for the workers.

The necessary starting point for the solution of this problem is to recognise the heterogeneous character of the peasantry. It is clear that in conditions of incipient industrialisation the rich peasantry, and even part of the middle peasantry, has no interest in giving up the private ownership of their products. But it is also clear that the growing inequality among the peasants, which private production rapidly and inevitably produces, separates out a layer of poor peasants whose paupers’ incomes by no means encourage them to hang on at any cost to their private minifundia (to say nothing of the agricultural workers on the large estates and the plantation workers who, in almost all the underdeveloped countries, are ready immediately after the socialist revolution for experiments in collective agriculture). Workers’ states must therefore give priority to organising cooperative farms and/or collectives which will be joined essentially by those poor peasants and agricultural workers. From the outset these farms must receive investments and credits enabling them to operate with a labour productivity far superior to that of the private sector. They must be capable of rapidly guaranteeing their members a standard of living and comfort superior to that of the middle peasants and even to that of a part of the rich peasantry.

The creation of such a sector alone – though still largely a minority sector and based on the genuinely and completely voluntary adhesion of a segment of the peasantry – would set in motion a whole series of mechanisms which would assure the progressive solution of the contradictions between private agriculture and the socialised economy. The provisioning of the towns would be quickly freed from the monopoly of the kulaks. [34] Competition between the collectivised and the private agriculture sectors would block the steady rise in the prices of agricultural products by which the kulaks would drain off an increasing part of the social surplus product. The example of a higher level of productivity and life on the cooperative and collective farms would gradually attract a growing proportion of the middle peasants to the public sector. Their integration in the socialised economy would be accomplished not through terror nor lowering their living standard, but by raising it. This would avert an increase in social tension in the countryside with all its negative consequences.

The catastrophic error committed by the Stalin faction in the USSR consisted in delaying both the progressive collectivisation of agriculture and the accelerated industrialisation which should have created the mechanical base indispensable for agrarian collectivisation. [35] The decision to move against the kulak threat was precipitate and panicky because the danger was unforeseen. This move took the form of a forced collectivisation in which the already existing tractors and agricultural machinery were not sufficient to assure a higher level of productivity for the kolkhozes so created. This was the source of the catastrophic results of thirty years of Stalinist agricultural policy. [36]

9. Autarchy and Trade With the Capitalist World

The Soviet leaders did not choose an essentially autarchic path of development for the economy of their country either out of a theoretical error or an overestimation of the USSR’s economic resources. This road seemed the only valid one to them prior to the victory of the revolution in the industrially advanced countries. Because of the superiority of big imperialist industry, no relatively underdeveloped country can succeed in industrialising under competition with the world market. The state monopoly of foreign trade is an indispensable protective barrier that has enabled countries like the USSR, Poland, and Yugoslavia, to say nothing of China, to create an initial elementary industrial infrastructure.

However, development under the protection of a monopoly of foreign trade and entirely autarchic development are clearly two different notions which must not be confused. The monopoly of foreign trade must protect incipient socialist industry against the competition of cheaper capitalist commodities. But its objective is by no means to reproduce within the borders of a workers’ state or group of states, which have abolished capitalism, all branches of agriculture and industry that exist in the rest of the world. Such an undertaking is totally utopian. Entering on this path means the imposition of additional, useless, and avoidable sacrifices on the producers in countries with a socialised economic base.

The correct orientation is that of calculating in a deliberate way the advantages and disadvantages of given trade relationships with the international capitalist market, taking account of certain clear priorities (defence, industrial equipment for “launching” industrialisation, scientific instruments, etc.). Even the concept of “loss” is a relative one. It may be preferable to export certain commodities “at a loss” in order to make it possible to import other commodities “at the world market price” when this loss is less than that which would be caused by the establishment of plants condemned to operate “at a loss” for a long period. Such a preference would not be justified, however, when the commodities exported “at a loss” could provide the basis for a manufacturing industry operating “at a profit,” both for the national economy and for the international market. Nor would it be justified if the loss caused by these exports would be higher than that incurred by the establishment of new factories to make products out of the exported materials, and which would replace goods previously imported at high costs.

Still less must the necessity of protection against foreign competition be confused with a “socialist ideal” of autarchy. This necessity persists, it is clear, only as long as the productivity of labour in the countries which have abolished capitalism is generally lower than in the imperialist countries. With the growth of the productive forces and the extension of the geographic area in which capitalism has been abolished, more and more sectors emerge whose products cost less in terms of overall labour expenditure – with equal quality – than they do in various imperialist countries or even the most advanced imperialist countries. Thenceforth, international trade with the imperialist countries, far from being a necessary evil, becomes a blessing. From then on the international capitalist market is forced through trade to contribute to socialist accumulation in those countries with a socialised economic base. For, in these conditions of higher socialist productivity, commodity exchange involves a transfer of value from the imperialist countries to the workers’ states.

The advantages of the international division of labour can be utilised for building socialism first of all through a certain specialisation which capitalises on the particular geographic, climatic, or human resources of the countries that have abolished capitalism. The more industrialisation progresses (including the industrialisation of agriculture) and the level of productivity rises in a series of branches of the socialised economy, the more the advantages of an international division of labour can be exploited in the workers’ states independently of their particular natural resources. Then these advantages can be exploited increasingly as a result of technological superiority acquired in this or that industrial area over one or more imperialist countries. The principle by which this objective can be obtained is ultimately very simple: sell more cheaply than your imperialist competitors but at prices higher than the real costs of production.

Because of their industrialisation and their already attained level of development, the USSR and certain so-called people’s republics (in particular East Germany and Czechoslovakia) are presently in a position where their level of labour productivity is higher than the underdeveloped countries, which are exclusively exporters of raw materials. By trading with the underdeveloped countries at “world market prices” they exploit them economically, that is, drain toward their economy a part of the labour expended there. Such a policy is in general counter-indicated inasmuch as it helps to consolidate the imperialist hold on these countries through “world market prices” and even offers a justification of their exploitation by imperialist capital. [37] It becomes a real scandal when it is practised toward other countries that have abolished capitalism.

10. Economic Relations Among Workers’ States

The extension since the second world war of the geographic area in which capitalism has been overthrown poses a certain number of concrete economic problems which could only have been dimly perceived by Marxist theoreticians in a previous period. [38] The thorniest problem is determining the desirable degree of national autonomy in setting the plan’s objectives and in the use of national resources.

From an abstract point of view, it might be considered that a total pooling of the resources of all the countries that have abolished capitalism, and the formulation of a single plan of development for all these countries, represents the most rational solution; it limits to the utmost overhead expenses and duplication and makes it possible to exploit fully the principle of an international division of labour. However, two arguments weigh against the adoption of this extreme view.

First of all, the historic exploitation of the small nationalities, as well as several numerically large nations, by the big imperialist powers has produced in them a backlash of jealous attachment to their national independence and a mistrust for all great powers, including those which have abolished capitalism. Moreover, the national oppression suffered by several of these nations at the hands of the Soviet bureaucracy, above all in the Stalin era [39], has further reinforced this mistrust. Complete economic integration at a single stroke of all workers’ states would collide with the national feelings of these peoples, who are not ready to make important concessions of sovereignty. This obstacle can be ignored only at the cost of grave political and social conflicts. It could be overcome in a positive way only after a rather long transitional phase in which the nationalities in question gained practical experience of entirely unselfish and fraternal behaviour on the part of the industrially advanced workers’ states.

Moreover, a total pooling of the resources of countries at too disparate levels of development would retard rather than accelerate their overall development. It would redistribute in favour of the most backward countries resources available for the development of industries more advanced and more suited to give impetus to technological development in the non-capitalist economies as a whole. An equal sharing of resources with a country as populous as China would threaten to result in a general drop in living standards in all the other countries of the “camp,” which would soon have adverse consequences both in the social and political realm as well as in the economic sphere itself.

However, while a complete pooling of the resources of the non-capitalist camp is inadvisable, completely independent development of each workers’ state economy as a unit causes equally irrational effects. Proofs of this irrationality abound today in Eastern Europe and in Asia: parallel development of manufactured items (automobiles, for example) which remain far below the profitability threshold (to say nothing of the optimum magnitudes); the obstinacy of countries like East Germany in developing a steel industry for which they have none of the requisite basic raw materials; Poland’s continuing to expand coal production, which is heading directly toward excess capacity and chronic overproduction, simply because coal is considered one of Poland’s few “national riches”; the lack of coordination between the USSR and China for common exploitation of the natural resources of Central Asia on both sides of the Sino-Soviet frontier and for developing (including the settlement) of semi-desert regions; competition on the international capitalist market of agricultural products and products of light industry of several workers’ states (in certain areas this competition extends even to the products of the machine-goods industry), etc., etc. It goes without saying that the narrow nationalist mentality exhibited by the various bureaucracies in power in these countries can only reinforce the objective and subjective obstacles in the way of economic integration.

The most rational solution seems to be one avoiding both extremes, that is, rapid, total integration and “totally independent national development.” What must be done is to promote a system of progressive integration of the economies of the workers’ states which would respect autonomy of national planning as long as the nations in question were not truly and honestly convinced of the advantages of a surrender of sovereignty, but which would at the same time progress toward the necessary economic unification. This unification should be pursued both through the creation of a series of common institutions and instruments and by a deliberate effort to reduce the gap in the level of development separating the various workers’ states.

With regard to institutions, economic integration would be first of all facilitated by the creation of a unified currency zone (first reciprocal, then multilateral convertibility of currencies) and finally a single-currency zone, the creation of common planning bodies in specific sectors, common formulation of projected long-range plans for zones or regions comprising two or more states, etc.

What is essential is that these different experiments do not objectively serve – nor be subjectively felt – as means for subordinating the “poor” countries to the “rich,” or for their exploitation by them. This is why a deliberate effort to transfer resources from the most developed workers’ states to the less developed is absolutely indispensable. If this is done in degrees which would not subvert growth possibilities in the most developed workers’ states, or a constantly rising standard of living for their peoples, such a transfer could become the principal motive force of economic integration. This transfer is required all the more from the moral and political standpoint – proletarian internationalism – because in the last analysis it is the only way to compensate for the advantages the more advanced workers’ states gain from their trade with the less advanced states, advantages which result from the unequal exchange inherent in trade relations at market prices among countries with a greatly differing average labour productivity.


1. Cf. for example this passage in Engels’ The Housing Question: “To speculate on how a future society might organise the distribution of food and dwellings leads directly to utopia. The utmost we can do is to state from our understanding of the basic conditions of all modes of production up to now that with the downfall of the capitalist mode of production certain forms of appropriation which existed in society hitherto will become impossible. Even the transitional measures will everywhere have to be in accordance with the relations existing at the moment. In countries of small landed property they will be quite different from those in countries where big landed property prevails, etc.” (in Karl Marx and Frederick Engels, Selected Works, Foreign Languages Publishing House, Moscow 1950, I, p.572).

2. In his writings on the Paris Commune, he clearly saw the danger of the bureaucratisation of the society in transition from capitalism to socialism.

3. Cf. the famous passage in the Introduction to Grundrisse where Marx, in dealing with the method of political economy, points out that the reduction of “concrete labour” to “abstract labour”, to labour in general as the creator of wealth, was possible only after the capitalist mode of production had created a form of society “in which individuals could easily move from one job to another” (Karl Marx, Grundrisse der Kritik der Politischen Ökonomie, p.25, Dietz Verlag, Berlin 1953).

4. This formula, which is owed to V.M. Smirnov, was used for the first time in an extensive way by Evgenii Preobrazhensky in his New Economics, Clarendon Press, Oxford 1965, pp.79-136.

5. For example, the thesis – maintained (at the prompting of Pannekoek) by the German KAPD (Kommunistische Arbeiterpartei Deutschlands – Communist Workers’ Party of Germany) and by Bordiga – that capitalism had been reintroduced into the USSR after the onset of the New Economic Policy (NEP). These postulates are no more than the direct offspring of those maintained by the social democrats hostile to the October Revolution, in particular Otto Bauer (Bolschewismus oder Sozialdemokratie).

6. As early as 1923, in The New Course, Trotsky concurrently advocated a return to Soviet democracy and accelerated planned industrialisation.

7. I will come back later to the catastrophic consequences brought on by delaying industrialisation and the introduction of progressive collectivisation in agriculture – particularly in making the Stalin faction rush into a forced total collectivisation of agriculture after 1928.

8. Cl Nikolai Bukharin, Ökonomik der Transformationsperiode, and especially Otto Neurath, Wesen und Weg der Sozialisierung, Munich 1919.

9. In particular Kautsky’s work, Das Erfurter Programm (9th Edit., Dietz Verlag, Stuttgart 1908, pp.158-59), which he wrote in 1892, educated successive generations of Marxists, including the Russian Marxists.

10. Need it be recalled that, according to Marx, “Only such products can become commodities with regard to each other, as result from different kinds of labour, each kind being carried on independently and for the account of private individuals.” Capital, International Publishers, New York, 1967, p.42.

11. If the producers are unable to make independent decisions in regard to consumption, there is the danger that, in the absence of an abundance of use values, their labour will tend to become forced labour.

12. This is not true for services, however. Here, in accordance with the resources which society is prepared to devote to these services, distribution can be effected on the basis of need in health, education, urban transport, electricity, gas, or housing.

13. See, for example, the article published by the Czechoslovak weekly Literarni Noviny in the summer of 1967 which traced the recent development of prostitution in that country to the fact that “individual affluence is the standard for judging the value of persons in Czechoslovakia. An individual with a high standard of living is a ‘lepsi’ (a better element); one with a low standard of living is a ‘necenny’ (a worthless person) ...” See also the Soviet judge’s extraordinary reply to the poet Brodski at the time of his trial, “How can you prove you are not a parasite if you only earn 50 rubles a month?”

14. Ernest Mandel, Traité d’Économie Marxiste, Julliard, Paris 1962, II, Ch.17.

15. Karl Marx and Frederick Engels, Selected Correspondence, Progress Publishers, Moscow 1955, p.199.

16. Especially not forgetting to include in the calculation of investment project costs the infrastructure and road-building work; the costs of transporting the raw material and finished products; the detractions from the natural environment it causes (and indirect consequences like air and water pollution); and an estimate of the social costs incurred by the transfer of manpower, the necessity of building homes, schools, and distribution centres, etc. In the capitalist system, the majority of these costs are not taken into consideration in calculating the “profitability” of individual enterprise because they are socialised (the state takes charge of them), or else purely and simply disregarded. Including these elements in the calculating in a socialised economy properly increases its rationality and scientific character.

17. See, for example, Ulbricht’s Die Bedeutung des Werkes Das Kapital von Karl Marx für die Schaffung des entwickelten gesellschaftlichen Systems des Sozialismus in der DDR und den Kampf gegen das staatsmonopolistische Herrschaftssystem in Westdeutschland, in Neues Deutschland, No.13, September 1967.

18. Evgenii Preobrazhensky, The New Economics, Clarendon Press, Oxford, pp.136-146.

19. Trotsky (Revolution Betrayed, Pioneer Publishers, New York 1945, p.67) speaks even of the “extreme extension” of commodity circulation in the phase of transition from capitalism to socialism. The context indicates, however, that he saw the extension of this commodity production as arising essentially from the disappearance of the enormous natural economy sector which existed in the Russian countryside (those sectors “which produced to consume on the spot”). It is in this sense that his formula must be understood: “All products and services begin for the first time in history to be exchanged for one another” (Ibid., emphasis added). That obviously does not apply to countries more advanced than the Russia of 1917 where natural economy and subsistence farming have largely disappeared under capitalism. It does not apply either to the USSR of today, the second-ranking industrial power in the world, where without any doubt the material conditions exist for the beginning of the disappearance of the market categories.

20. For example, projected curves of restructuration of household expenditures regarding different groups of goods and services for different income categories could be drawn upon condition that there were no distortions or abrupt price jumps, and on the condition that these curves covered an already sufficient number of years during which a given structure of expenditures began to change.

21. See in this respect especially Janos Kornai’s work, Over-centralization in Economic Administration; the article by David Gullick (Initiative and Independence of Soviet Plant Managers, in the American Slavic and Eastern European Review, October 1952); and the article by Joseph S. Berliner (The Informal Organization of the Soviet Firm in The Quarterly Journal of Economics, August 1952), etc., etc.

22. Traité d’Économie Marxiste, II, pp.240-273. See also my article La Réforme de la Planification Sovietique et ses Implications in Les Temps Modernes, June 1965.

23. The Yugoslav experience has confirmed the utopian and apologetic character of the view that self-management at the enterprise level deproletarianises the workers. Since the market economy brings with it the danger of a reappearance of unemployment as well as penalisation of the workers in certain enterprises for wrong decisions (over-investment, etc.) made in other enterprises, they are far from having become the “masters of their destiny.”

24. This should be assured by setting a maximum income for the great majority of the members of this congress so as to prevent the workers’ councils from being essentially represented by bureaucrats.

25. See in this respect the exact figures which are cited in my Traité d’Économie Marxiste, II, pp.213-16 and 303-309.

26. In Poland in recent years this has produced the famous “pig and horse cycle”: the resources which the peasants procure through the increased sale of ham are invested in raising grain production – used to feed an additional number of horses on the private farms, which makes possible expanded pig raising.

27. Cf. Engels, Herrn Eugen Dührings Umwalzung in der Wissenschaft, pp.194-95 of the edition of the Verlaggenossenschaft Ausländischer Arbeiter in der USSR, Moscow-Leningrad 1934.

28. Cf. Lenin’s The Immediate Tasks of Soviet Power, p.379 in Questions of the Socialist Organization of the Economy, Progress Publishers, Moscow, undated, p.108: “The corrupting influence of high salaries – both on the soviet authorities ... and upon the mass of the workers is indisputable.”

29. Certain of Lenin’s formulas were clearly ambiguous. See especially The Immediate Tasks of Soviet Power, in op. cit., pp.133: “The more resolutely we now have to stand for a ruthlessly firm government, for the dictatorship of individuals in definite processes of work, in definite aspects of purely executive functions, the more varied must be the forms and methods of control from below in order to counteract every shadow of a possibility of distorting the principles of Soviet government, in order repeatedly and tirelessly to root out bureaucracy.” See also the statement on “individual leadership” on p.126.

30. Cf. Engels’ debate with the anarchists (On Authority, 1872), in which he asserts the necessity of a centralised authority in the enterprises but makes clear that this authority must emanate either from elected delegates or from the decisions by majority vote of a general assembly (Karl Marx and Frederick Engels, Selected Works in Two Volumes, Moscow 1950, I, pp.575-78).

31. I examined this question in detail in my book La Formation de la Pensée Économique de Karl Marx, Maspero, Paris 1967, pp.195-98.

32. Frederick Engels, The Peasant Question in France and Germany, in Karl Marx and Frederick Engels: Selected Works in Two Volumes, II, p.433.

33. Lenin correctly stressed that petty commodity production constantly tends to reproduce capitalism. V.I. Lenin, The Tax in Kind, in Questions of the Socialist Organization of the Economy, pp.289-290; and Collected Works, XXXII, p.414, Lawrence and Wishart, London 1960.

34. This has already occurred in Yugoslavia where the collective sector of agriculture, holding only 15 percent of the land, produces more than a third of the agricultural produce. In general, the agricultural policy conducted in Yugoslavia since the mid-nineteen-fifties can be considered correct (see E. Kardelj: Les Problémes de la Politique Socialiste dans les Campagnes, Editions La Nef, Paris 1960.

35. Moshe Lewin (La Paysannerie et le Régime Sovietique 1928-1930, Mouton, Paris 1966) notes that the construction of the tractor factory at Tsarytsyn had been decided on as early as 1924 but that nothing was begun in practice until 1929. Therefore, in 1928-29 70 percent of the old and new kolkhozes had no tractors.

36. From 1930 to 1955, per capita agricultural production (except for industrial crops) remained lower in the USSR than in Czarist Russia in 1916. For animal husbandry, the level of 1913, or that of 1928, was not yet overtaken even in 1960, except for swine.

37. See the speech of Ernesto Che Guevara to the Afro-Asian economic seminar in Algiers, in Che Guevara Speaks, Merit Publishers, New York 1967, pp.106-117.

38. See, however, Evgenii Preobrazhensky: The New Economics, which foresees the creation of a system of mutual assistance to be established among all the countries where the proletariat has been victorious.

39. This was exposed at the time by the Yugoslav Communist leaders (see Melentlje Popovic: Des Rapports Économiques Entre États Socialistes, Le Livre Yugoslave, Paris 1949). Recently, the Chinese Communists exposed the fact that in trade between the USSR and Outer Mongolia a Soviet tyre is exchanged for 40 Mongolian sheep, a meter of Soviet woollen cloth for 50 kilograms of Mongolian wool, one Soviet bicycle for four Mongolian sheep, etc., etc. (Renmin Ribao, 13 September 1967).

Last updated on 19 February 2010