THE position of the working class under NEP improved in proportion as industry and agriculture were restored. Already in the first year of NEP, when the number of workers in the factories was reduced and most of them were put on piece-work, the workers’ wages rose and their position was somewhat bettered in comparison with previous years. The yardstick I use means nothing to you if I say that the average wage at the beginning of this period was from ten to 15 gold roubles. (They calculated in those days in gold roubles at pre-war prices, translating the value of paper money and rations into pre-war gold roubles.) But this wage was paid irregularly. When the transport system proved unable to cope with freights, and the distributory apparatus of the Food Commissariat made mistakes, when paper money did not reach the outlying areas in time, or was insufficient, the worker did not receive even this wretched wage when he should have received it. True, at the beginning of NEP the worker was provided with a number of services gratis (accommodation, water, light, travel, education for his children, newspapers and books, and to some extent entertainment). But later, payment was introduced for all these services, except children’s education, and wages were raised accordingly, though in most cases not to an adequate extent. ‘After the harvest of 1922 the position of the workers improved a little more, and this was not a mere seasonal improvement. I must tell you that in the civil war period the workers’ position improved seasonally, in connection with the collection of the tax in kind in the autumn and winter, and worsened in the spring and summer, when the agricultural produce collected by way of the confiscation of surpluses proved insufficient. Now a certain evenness in the distribution of state resources over the whole year had already been achieved. At the same time, the most important products which the workers had to buy, that is, mainly, foodstuffs (except fats), fell in price from the famine levels of the civil war period. The following years were years of uninterrupted improvement in the workers’ position. Every new step forward by industry meant not only an increase in circulating capital in the enterprises, with the possibility of extending activities and repairing equipment, but also provided certain resources for raising wages. In general, real wages increased by 10 to 15 per cent each year.
At the same time a characteristic difference in the method of distribution of the commodity-socialist system of economy, as compared with a purely capitalist system, was to be observed in this period. Under the capitalist system overproduction usually resulted in the suspension or contraction of production until the goods lying unsold in the warehouses had been dispersed in circulation. With the nationalization of large-scale industry this method of distribution did not always have to be followed. Besides the effective free market and the effective market of state industry there was the market offered by the workers as consumers. And, for example, when overproduction occurred, say, in manufacturing industry, the state could distribute whatever could not be sold on the free market among the working class as a whole, crediting these goods to wages. In the same way as there was a system of credit whereby resources were spent at the expense of the future income of an enterprise, so in this case the state gave an advance to the worker-consumer at the expense of the future income of the economy as a whole. Leaning now on its ‘socialist’ leg and now on its ‘bourgeois’ one, and manoeuvring in this way, the state solved the problem of a sales crisis in the following fashion. The production of enterprises which manufactured consumer goods was divided into a portion which encountered effective demand on the free market and a portion which was made available to the state to increase the real wages fund. Those enterprises which produced this ‘surplus’ (from the capitalist standpoint) were paid by the state in accordance with its resources, either receiving the full value of this surplus or else merely a subsidy to enable them to continue production on the same scale. The state made these purchases of ‘surpluses’ and gave these subsidies out of the resources which it obtained by cutting down expenditure on the bureaucratic apparatus. Economically such a solution of the problem was facilitated by the fact that the state’s payments to its own enterprises which were engaged in processing work mainly took the form of supplying them with raw material. And this portion, as I have already mentioned, was always less in value than the product which was manufactured from this material. The chief difficulty here was not to solve the sales crisis in a socialist way by reselling the surplus to the state, but to ensure that the state always had an adequate reserve fund to subsidize expanding industry. This problem was solved in proportion as the state’s share in the national income increased, at the expense of petty production. Thus our grandfathers learnt gradually to make use at one and the same time of socialist economic relations and of those capitalist forms for the abolition of which the time had not yet come.
The problem of ‘overproduction’ of instruments of production was solved in approximately the same way. In the period we are studying, one section of the state enterprises regularly manufactured more machinery and metal than the other section could purchase, owing to the shortage of fixed and circulating capital The state economy became, so to speak, entangled in the snares of capitalist forms of calculation. But since circulating and fixed capital does not drop from the sky but is created in the process of production in industry itself, the state’s task here too was to cut through this contradiction between capitalist forms of calculation and the real possibilities of developing production, by drawing on the reserves of the state’s own funds. The state in this case too gave the necessary subsidies for the purchase of instruments of production by these factories which lacked resources for this purchase, or else gave subsidies to the enterprises producing instruments of production, in accordance with what they produced. At this point we are touching on the question of how the central management of the entire state economy was organized at this time. We shall speak in more detail about this later.
Thus, already at that time, large-scale socialist industry began directly to serve the purpose of improving the position of the workers and enlarging their consumption. True, it was still extremely difficult to strike the balance between what could and should be assigned to the workers’ consumption fund and what must be capitalized, for expanding fixed and, in part, circulating capital. The state economy in this period struggled with the same sort of Hamlet-like problems as a man who has neither boots nor breeches and the money to buy only the one or the other but not both.
While the workers of Soviet Russia in the second half of the first decade of NEP began to eat and dress no worse than before the war, and their real wages equalled and sometimes exceeded the wages of workers in other European countries, in the field of housing their situation was very much worse. The increase in the urban population now outstripped the process of restoring ruined houses and building new ones. In capitalist society a definite part of capital was always devoted to the repair and new construction of houses. This was the case in our country before the war. During the war and the revolution not only did all new building cease but the means were lacking even for current and ordinary repairs. The destruction of dwellings was so extensive that in spite of the great reduction in the urban population, especially in the urban working class during the famine years, the buildings available and fit for living in were inadequate even for this much reduced number. In the first years restoration in the housing field began mainly with the repair of existing structures, and there was little new building. What new building there was began chiefly in Moscow, where for the first time a few huge new blocks of workers’ flats, constructed according to the last word in housing technique, were put up amid great celebrations. The completion of these structures was a holiday occasion not only for the proletariat of Moscow who were going to live in them, but for the whole republic. However, neither these comparatively few constructions nor the intensified repairing of old blocks of flats could solve the housing crisis. In proportion as industry was restored, not only did the workers who had fled to the villages during the famine years now return to the towns, but also the unemployed peasants belonging to those strata which had not succeeded in restoring their economy began to be drawn towards the towns. The drift from the villages to the towns increased also owing to land hunger and over-population, which began to make itself felt in the countryside. In addition, the building and repairing of the towns attracted a mass of building workers from the rural areas.
Despite the fact that the task of restoring the towns was very greatly helped by the organization of special joint-stock companies for building activity, the shareholders in which were the workers and office-workers who were going to receive flats in the newly-built blocks, and despite the drawing of foreign capital into the building industry, the crisis was not overcome, and you can judge the dimensions of it by newspaper articles which you can find in our archives. The government was obliged in those days to establish in the vicinity of the large towns numerous workers’ settlemen’s composed of wooden bungalows, which have survived, as you know, to the present time, and tram lines had to be laid to serve these new inhabited areas.
In general, as you know, the question of the destiny of large towns was not decided quite in the way that had been indicated in the socialist writings of the capitalist period, which had said a lot about what was called the urbanization of the country-side. To break up a big town and scatter it over the fields of the countryside proved to be technically disadvantageous and in some respects economically inexpedient as well. Of course, all unnecessary outgrowths of a big town were transferred to its edges and to the rural areas. You know that quite a lot has been done in this connection in the last half-century. But you also know that we are far from having completed this work, and it is still uncertain when it will be completed. Those factories which cannot be shifted to where the sources of their raw material are to be found work more profitably in a big town amidst a lot of other factories, from which they obtain everything (apart from raw material) that they need for production, and the products of these factories are often put to use precisely in a big town. To break up this huge unified workshop, which is what a big town is, was found to be often harmful from the economic standpoint. Furthermore, the big towns could hardly be replaced as cultural centres, in spite of all the advances in broadcasting. Therefore, naturally, the solution of the problem had to be sought first and foremost in transport, and not in breaking up the big towns. Already, in the decade we are talking about, very great attention was paid to transport problems. In those days, it is true, communication between Moscow and the suburban areas was effected chiefly by railway and by electric trams along the suburban roads; air communication was not used on a mass scale as it is now. But this has merely made travel quicker in the Moscow periphery and the suburban area in which tens of thousands of workers are able to live and enjoy the advantages of holiday-cottage life in the summer.
White today a worker can live a hundred versts  from Moscow and fly to and from the city, in the morning and in the evening, by passenger plane, in those days he could not live further than thirty versts out, having to travel in by railway or tram. The workers triad not to waste the time they had to spend in travelling, and usually read the newspapers in this period. You can get an idea of the poverty of housing in that epoch from the photographs which have been preserved in the museum of the revolution, and also to some extent from the works of our historical painters, in the Tretyakov Gallery.
We will now see how already at that time the system of socialist distribution was originating which prevails amongst us today, and which still, alas, does not correspond to the Communist ideal: ‘from each according to his abilities, to each according to his needs.’
In the period of War Communism a bold attempt was made (partly under the influence of economic necessity) to leap over the love cultural level of the masses and introduce a system of equal rations for all. There was hardly any difference between the ration received by a skilled worker and an unskilled worker. In the beginning there was only a very slight difference between the remuneration of a worker and an engineer, of a worker and a most responsible Soviet functionary, not excluding the People’s Commissars themselves. Each enterprise received an allotment of fond proportional to the number of workers employed in it, without any relation to the enterprise’s production. It got the same whether it fulfilled its task 100 per cent or only 10 per cent. As regards distribution within the factory, a worker who produced the maximum output got the same as one who produced the minimum. It is more correct to regard this experiment in distribution not as an attempt at semi-socialist distribution but rather as a means of purely physical maintenance of the proletariat in being during a certain period of the civil war. Looked at in this way, distribution in the period of War Communism appears in a quite different light, and from the standpoint of the physical maintenance of the working class – not maintenance or development of production – this system probably justified itself. But such a system could not continue for a long time even in the period of War Communism. In some branches they needed to increase production at all costs, as, for example, in war industry, feverishly working to serve the front. Given the inadequacy of resources it was found necessary to pick out what were called ‘shock’ branches of industry, and ‘shock’ enterprises, which were specially favoured. This process of selecting ‘shock’ units was later extended beyond the field of industry. Equality in wages had thus been violated even before the beginning of NEP. In addition, piece-work was gradually introduced, and the payment of specialists was increased; there were nearly 40 grades in the tariff of wage-rates. Still more sharply did inequality manifest itself as between unmarried workers and workers with families. In the War Communism period there were free meals for children, including those of the bourgeois elements. Under NEP this institution was almost completely abolished, and workers’ children had to be fed by their parents instead of by the state. Consequently, the difference between the position of a worker who was a bachelor and a skilled man, and that of an unskilled worker with a family was very great. And as the payment of specialists increased markedly at that time, the gap between the top and bottom of the wages scale increased several dozen times over. In addition, to the inequality within an enterprise was added inequality between enterprises. The singling-out of certain enterprises on the basis of their importance for the whole economic process, which had begun under War Communism, was continued, but in a purely spontaneous way. Those enterprises were necessary from the standpoint of the free market which manufactured the goods for which there was the most demand. Unless an enterprise was supported by the state as being very necessary regardless of whether it was deficient or not, the question of its necessity was settled by reference to the market. On the market, enterprises were not all on the same footing: there were favourite sons and there were stepsons. There were enterprises which made big profits, and there were others which hardly made ends meet, or even failed to do this. Those of the former category were in a position to pay their workers and technical personnel a great deal more than those of the second, and they made use of their right to vary wage rates by varying them upwards. Thus, if the distribution that prevailed in the War Communism period be regarded as equality, then, in accordance with the Hegelian triad, the first years of NEP were the complete negation of this equality, the most extreme degree of inequality, and, if it is appropriate to use a moral expression here, distribution was then extremely unfair. But this mode of distribution was absolutely necessary at that stage. The personal interest of each worker in increasing his output was stimulated, true, by a purely bourgeois method; in return, this method of distribution compelled everyone to pull themselves together, as compared with the period when industry was socially guaranteed by the state and labour discipline went all to pieces. The slogan of this period was: expand production at all costs, at the least possible expense, increase the quantity of products in the country by whatever methods are expedient. Given the country’s poverty, the low cultural level and the absence of preparation for a different mode of distribution which would have meant greater equality, there was no other solution. The inequality of this period was justified by the fact that the productivity of labour did actually increase and the most difficult phase was overcome.
But the advance of production and the increase in the state’s revenues created the conditions in which inequality in distribution began to be resolved, little by little. During the first decade this process did not go very far, but its fundamental features were already quite definitely to be observed. Let us se how all this happened.
When the resources of state industry began to increase, and when taxes began to bring in substantial Bums, the first thing done was to establish a minimum wage. The increased resources of the state and of state industry made it possible to increase wages generally; but the Soviet state and the trade unions set themselves the task, while raising the wages of all categories of workers, to raise relatively more the wages of the worst-paid sections. Later, another thing which tended to reduce inequality within the working class was the fact that, as electrification progressed, the employment of crude physical labour began to decline.
This redistribution of labour power between the skilled and the unskilled groups led to an ever larger section of the formerly unskilled being transformed into workers at machines, receiving a higher wage than before. In this way the progress of electrification led automatically to a levelling of the material position of the workers. Then, the development of a system of technical education of the workers had a great influence. Every working-class youth who had undergone technical training was acquainted with the elements of a number of trades. The children of unskilled workers and the children of peasants who had emigrated to the towns studied on an equal footing with the children of skilled workers.
The level of skill of all sections of the workers became more equal, and it was no longer possible to pay young workers who had been through technical school as though they were unskilled, even in those cases when they were assigned to unskilled work.
As regards inequality of payment between the workers and the technical personnel – this too began to be evened out, as the higher technical schools filled up with students who were all from the workers’ faculties, and later with young workers from the lower and middle technical schools. This entailed a gradual regeneration of the tissue of the entire cadre of specialists in the country. The new, Red worker-engineers looked on themselves as merely more highly skilled workers than the rest of the proletariat and did not expect to be paid for their work at such rates as the bourgeois specialists demanded. And when the state and the trade unions raised the wages of the lower-paid groups, first and foremost, this did not call forth any protest from the worker-engineers.
Inequality between different enterprises was gradually over-come thanks to the fact that in practice the necessary equilibrium and the necessary proportions between different branches of production were gradually achieved. This resulted in the establishment of substantial material equality in the situation of the different enterprises.
Inequality between unmarried and family men, which had reached its highest point in the period when free meals for children were abolished and kindergartens, children’s colonies, creches and so on were closed down in great number, now began to be levelled out more and more each year, thanks to the new successes of social guardianship. In the first years of NEP the state, which had little to spare for popular education, naturally not only did not subsidize new children’s homes, orphanages and so on but even had to deny support to those which had come into existence. As industry advanced and the state’s tax revenue increased, a sharp turn took place on this front. Every year an ever greater share of the state budget was assigned to popular education, and especially to the education of workers’ children. The number of children’s institutions began rapidly to increase, and their amenities improved year by year, with the active support of the trade unions and of individual factories. Free meals for children were fully restored. Children began to be maintained by the state, and not only so far as food was con-cerned but also in respect of their school needs, their clothing, their toys, and so on. All this meant not only progress in the field of social guardianship, which in the period of War Communism had been a great dream rather than a reality, but also an equalizing of the material situation of married and unmarried workers. Workers with families were no longer obliged to spend a large part of their wages on their children, because everything these children needed was provided by the state.
Before going on to talk about the organizational structure of the Soviet economy in this period, I must clarify one important fact in the history of this period, namely, the crisis in skilled labour power. When industry was rapidly collapsing, and even in the period when it was only beginning to revive, the crisis in labour power did not make itself felt acutely. True, there was a moment, especially in the autumn of 1920, when a shortage of skilled labour seemed to be revealed. But this was a very temporary difficulty, because the expansion of industry at that time was also very temporary. The situation was different when, after a few years of the New Economic Policy, a regular expansion of industry began. It then became plain that our industry would not be able to attain pre-war figures for the simple reason that more than half of the skilled workers had completely disappeared: some had died natural deaths, others had been killed at the front, others had taken up responsible work in the state machine, others had sunk themselves irrecoverably in the rural areas. At the same time, there was a considerable lowering of the level of skill of the workers generally. The preparation of workers and young workers for skilled work was carried on only on a small scale, so that even the natural loss was not made up. Yet it was now necessary not only to replace the annual loss through death but also to supply fresh cadres for expanding production. From this crisis the republic emerged by two ways. First, through the immigration from Western Europe of substantial cadres of skilled workers who were driven to Russia by the unemployment raging over there. But the chief way out was through the establishment in this period of an enormous network of factory apprentice schools, the syllabus of which was considerably broadened on the general education side. As there were not enough working-class youths to fill the newly organized schools, the state had to carry out a number of ‘mobilizations’ among the young peasants, and also to direct into these schools children from the urban petty-bourgeoisie and the intelligentsia. This was not carried out without a struggle, because the children of the intelligentsia strove in great numbers to get into the higher educational institutions, even in those cases when, so far as their abilities went, they had no qualification to enter them, as compared with the best cadres of the proletariat. Several years were needed to attain a certain equilibrium between the number of skilled workers, who were turned out in thousands by these schools, and the number which was required for the manning of expanding industry. The filling up of this gap in the very body of the working class naturally hindered for a considerable time the carrying out of that point in the Communist programme in the sphere of education which demanded general and polytechnical education for all children up to the age of 17. This programme began to be fully implemented only two decades later.
1. Verst = a Russian measure of distance, about 3,500 feet. [Trans.]
Last updated on 24.1.2009