E.A. Preobrazhensky

From N.E.P. to Socialism

Lecture 10

New forms of wages
The revolt of NEP against the proletarian dictatorship

WE WHO live 50 years after the period being described are unable fully to understand the psychology of that time. The 1920s are always depicted to us as years of the greatest heroism both in the military sphere and then, later, in the economic sphere. We are inclined to imagine our grandfathers’ generation in a uniform, dazzling, bright-red light, and in heroic tones: in short, poetry rather than prose. It is hard even for the historian to avoid this psychological mistake when he approaches the study of documents of that epoch and tries to capture the spirit of life in those days, to grasp what everyday life was like, to see all the variegations of the actual historical picture. It is hard for you, for instance, to believe that the great deeds of that epoch were accomplished by people with weaknesses and shortcomings, sometimes with criminal tendencies, and nearly always with an inevitably low cultural level, as was the case in reality, if we speak of the general mass and not of particular individuals or small groups. In the news columns of the newspapers of those days – Pravda, Izvestia, Rabochaya Gazeta, Byednota and the rest – alongside some historic decree or the announcement of some initiative the fruits of which we are enjoying to this day, you would encounter a report of the shooting of a group of citizens for stealing a couple of matchboxes from a railway truck, of the trial of bribe-takers from some economic organ, of speculations by Soviet functionaries drawn from the ranks of former merchants and industrialists, wailings about robbery of state property, and so on. The most notable poet of that period, Demyan Byedny, wrote words full of sarcasm and indignation about ‘soviets’ – Soviet idiots who let themselves be led by the nose by any crook from a Soviet institution. You can read in the newspapers of those day articles by a talented publicist of everyday life, Sosnovsky, about some scandalous business involving bourgeois specialists, you stumble with amazement upon Trotsky’s article about the need to clean one’s boots and not to throw cigarette-ends on the floor. Worse still, you can read about crimes committed even by the Communists themselves, to which most of them were driven by frightful poverty. On the one hand the great task of building socialism and the heroic struggle for it, arms in hand – on the other, the misappropriation of two poods of the state’s flour. Is this crime too great, and is the shame of it eternal upon the man who committed it, in comparison with the great cause for which he was fighting? Or are his great deeds boundless in comparison with his trivial crime? Looking at the question from the standpoint of the public opinion of later generations, we take the second of these views. But even if we recreate the actual situation of that time and see everything as it was in relation to everything else, if we observe the correct proportions of light and shade, this in no way forces us to feel disappointed in our evaluation of that epoch. On the contrary, I think, personally, that if a thousand people build a mighty bridge, and they do not consist of healthy and well-fed persons but of famished, sick people, with sores on their arms and legs, squabbling over a bit of bread, then they are very remarkable people. It is the same with socialist construction. When this work is done by people who are themselves tainted by capitalism, with a psychology which is a field of battle between ‘yesterday’ and ‘tomorrow’, people who, in the mass, carry in themselves all the barbarousness of capitalism and that uncivilized state in which it kept the mass of the people, this only increases our amazement at what was achieved in that epoch.

This was the situation as regards human material when state industry was being restored. The Communists had not learnt before that time either to manage enterprises, to trade, or to conduct banking activities. All these they learnt to do in the course of the work, just as previously they had learnt to build an army, to administer it and to lead it to victory. In this economic sphere, however, owing to the complication of the task itself the process was drawn out over a long period. At first the mass of former traders, entrepreneurs, and ordinary swindlers of every sort, robbed the state, carried on as was most profitable to themselves, and so on. But gradually these cadres were thrown out of the state service. On the one hand, a stratum of reliable and honourable people emerged from among the specialists, and, on the other, a considerable section of the Communist Party members themselves underwent training for this work, passing through higher schools, special schools and courses and probationary training in the existing organs of state trade and industry. Later, as it became clear that private trade and industry had no great scope for development, and, what was decisive, had no future, the best representatives of the class which had been overthrown began consciously and conscientiously to work for the state. A particularly favourable reaction occurred in these circles after the failure of the bourgeois-kulak uprising which took place at the end of the period we are studying and which we shall speak about in more detail later. In industry a role of decisive importance was played by engineers from the ranks of the workers, who built state industry as something close and dear to themselves, with the support of a section of the engineers of bourgeois background who had understood the spirit of the time, who had understood that socialist state production was on a higher plane than capitalist production, giving greater scope for the development of the productive forces, the progress of science and technique.

Of great importance also was a certain turn in the psychology of the Communist Party itself, especially among the young Communists. During the civil war it was absolutely necessary for a Communist to ‘know about everything’, even though on a superficial level. The revolution hurled the Communists this way and that, from a dozen tasks of one kind to a hundred of a quite different kind, while owing to the sabotage of the old intelligentsia they had to fulfil the role abandoned by that class, or to act as Commissars over them. The task of organizing state industry, trade, banking and socialist education in the broad sense of the term required, however, that the Party reject superficiality and the ‘jack-of-all-trades’ approach and obliged its cadres to specialize in particular branches of practical work and knowledge and throughly to learn whatever job each had chosen for himself or had been assigned by the Party. This made possible the formation among the Communists of cadres of genuine specialists in various spheres of work.

You and I, workers in a socialist society which is being gradually transformed into a communist one, are separated from the period we are studying by a whole epoch, in this respect too. I speak of incentives to work under capitalism and socialism.

You have already seen from the preceding exposition that War Communism gave no psychological stimuli either to increasing production in particular enterprises or to increasing the productivity of labour on the part of each individual worker. What was the situation as regards these incentives in the period we are examining?

We have seen that under NEP there was a turn in this connection towards capitalist incentives, which had begun to play a role already under War Communism. Eventually piece-wages became the predominant form of remuneration wherever it was applicable to the conditions of production. In general, the greater a worker’s individual output, the more he received. And every enterprise received more, either from the market or from the state, if it produced more.

This system began gradually to change as the state, partly in order to put an end to the artificial sales crisis and partly, and chiefly, owing to the increase in its resources, took to increasing wages from year to year. Experience showed that there was no need for the additional wages to be paid on the basis of piece-work. On the contrary, this additional wage-payment could become a more powerful instrument for increasing the productivity of labour it it was distributed as a collective bonus. Already the experience of collective supply, introduced in the first year of NEP had shown that when the increase in a worker’s earnings was made dependent not merely on how much he himself produced but on how the enterprise as a whole produced, this enormously strengthened the workers’ interest in the work of their mates at the bench, in that of the neighbouring workshop, in the work of the entire enterprise. The worker now did not merely keep an eye on himself, but also on others, while others kept an eye on him.

Something like a production morality binding upon everyone was evolved. A collective incentive was added to individual incentives and this was a higher phase of production discipline compared with the individual responsibility of each worker and individual reckonings with him. For this reason, the state, when it increased wages, while keeping the old capitalist incentive so far as one part of the worker’s earnings was concerned, at the same time introduced collective bonuses for the workers of those enterprises which fulfilled or over-fulfilled their production programmes. At the same time the enterprise was required to produce goods not only in a certain quantity but also of a certain quality; while the enterprise itself, from considerations of business accounting, was given an interest in the least possible expenditure of material and fuel, in working every section of the maximum capacity, and so on. Collective bonuses had been, in essence, decreed already in the War Communism period, but had then proved to be still-born, because when there was something that deserved a bonus there was nothing with which to pay this bonus, and the workers were cheated. In that period the state was not in a position to pay bonuses, because it could not guarantee a minimum of subsistence, not only for the workers but even for the army. True, there were in that period individual enterprises which displayed very great heroism on the economic front, even with such meagre feeding for the workers that they sometimes fainted at the bench. It was an act of heroism then to work at all. It was a matter of the same enthusiasm as well displayed in the struggle at the front, but it could not go on indefinitely, and its production results were not great.

The advance of industry and the increase in the state’s resources made collective bonuses materially possible and expedient in relation to production. Let us take an example. A congress of representatives of the different branches of the railway service is held. It emerges from the report on production that if the railway transports a certain quantity of freight, or more than that, if the depot workshops get through a certain amount of repair work on engines and carriages, if the railway uses no more fuel than is laid down, or even manages to use less than this norm, thén all the railway workers will receive a bonus of such and such an amount. The congress decides, in the name of all branches of the service, to qualify for the highest bonus, and this is made known all along the line, to every guard, every pointsman, every fireman. Everyone has an interest in seeing to it that engines and carriages are repaired at a brisk rate, that less fuel is burnt and that it is not wasted, that goods are carried to their destination safely, and so on. The entire running of the line is now carried on under the inspection of thousands of eyes. And at the same time, piece-wages are retained where they are technically possible and useful as incentives.

This collective bonus payment was the embryonic form °f a new form of wages characteristic of socialism. The new form grew up on the basis of the collective responsibility of workers for the results of production, on the basis of mutual supervision and, finally, on the basis of a higher level of culture and consciousness on the part of the working class generally. While piece-work stimulated competition between individual workers in a workshop, collective bonuses stimulated competition between entire enterprises, and eventually between entire branches of production. Essentially, the state distributed in this form the surplus values produced by the workers in the economy as a whole. Later on, as productivity of labour increased throughout industry, the greater part of wages began to be paid by the bonus method. The share of piece-wages in the total volume of wages paid declined every year. But piece-wages died out not only materially but also psychologically, in that the fulfilment of a certain average minimum of work became transformed into a kind of work-instinct which was a matter of habit and for which no remuneration was specially paid.

It is true that matters advanced very slowly in this respect, because the triumph of the new form of wages was closely connected, as we have already said, with a growth in the level of culture and consciousness of the working class which was not attained in a few years. How difficult was the advance in this direction can be seen from the fact that we have still not achieved communist distribution. Here it is a question of transforming the human character in the expectation that that will come to be done by instinct which was formerly done by compulsion or by the promise of material reward, or else was an act of collective enthusiasm and self-sacrifice. The replacement of one generation by another, and a new system of education, was needed before the new collective man could replace the individualist of the period of commodity production. The moment when collective incentives become dominant in the working class, as compared with individual incentives, is a triumphant moment in the building of socialism, of no less importance for the future than the socialization of the instruments of production. And though we have not attained to communist distribution we have advanced a long way towards it in comparison with the period under examination, when the worker, like a child, had to be led towards awareness of the need to do a certain piece of work not by knowing the statistics of production and demand but by the promise of being given another pood of bread or a larger sum of money.

As regards the work accomplished by foreign capital in Russia in this period, the extent of the influence of this capital on the country’s internal economic life was not particularly great in comparison with the role of foreign capital, as industrial capital or as merchant capital. So far as loan capital was concerned, during the decade being studied the Soviet Government negotiated several loans in a number of countries. But these were small loans, mostly in the form of commodities. Capital did not flow into large loans, which seemed to it risky investments. In the field of industry the situation was a little: better. But it must be remembered that capital in all countries in this period was in a period of senile decrepitude. It was fearful of great initiatives and risks, and, in its senile cowardice, was not tempted even by big profits. The only exception was German capital. Foreign capital had, of course, no great incentive to go into those branches of industry which worked for the internal market, in that this market was almost completely satisfied by the products of Russian industry. This was true especially of the period when the commodities produced in the country were sold for paper money of the declining currency. Foreign capital was naturally attracted to those enterprises which produced goods for export, for instance, the petroleum industry, gold and platinum, timber, copper, and so on. At the same time it was not inclined to undertake investments which could not give results before a long time had passed. There was no point in the Soviet Government leasing to foreign capital those enterprises which produced profits without particularly large expenditure, however small were its own circulating media. The attraction of German capital was in general a great success for the economy of Soviet Russia, and especially the attraction of this capital to develop on a large scale the desert expanses of the South and South-East and of Western Siberia and to establish here tractor centres and animal raising farms. German capital was more enterprising and more mobile than British. It was obliged to take greater risks than British capital, which still had incompletely utilized possibilities in the colonies. German capital wedged itself into the economy of Russia and, without knowing it, worked for the creation of a single mighty economic union between Russian agriculture and German industry, the fruits of which later on were to be reaped by socialism. It was from German capital that our agriculture obtained to a considerable extent that commodity credit, in the form of agricultural machinery and implements, which made it possible for the agricultural bank to organize long-term agricultural credit on broad principles. As regards American capital, its participation in the economic life of Russia was the most important, after that of German capital. But it was chiefly and rather exclusively interested in our petroleum, manganese and platinum industries, that is, in the branches of production which were needed by the American economy.

As regards foreign trade, this grew from year to year, and by the end of the decade the export of raw material and grain was already in excess of pre-war. The Soviet Government tried to keep that section of foreign capital which was interested in trade in the channel of wholesale trade, regulating it through participation in mixed trading companies. It endeavoured to prevent the penetration of private foreign capital into the internal retail trade. In this way, foreign capital was kept confined to the borderlands and the areas around the ports engaged in foreign trade, and was not allowed without some special need to extend its tentacles into the interior. This was the source of great misunderstandings with foreign merchants, especially at the start, when foreign trading firms, above all those of the speculative type, burst into the country in search of maximum profit. Later on they reconciled themselves to the situation that had been created, restricting themselves to participation in wholesale trade and attendance at the big fairs, where their deals were made mostly with co-operatives, state trading and trusts. The monopoly of foreign trade was formally abolished once the state had become de facto the monopolist of foreign trade. A formal monopoly was retained only for trade in a certain, strictly defined number of goods.

In any event, foreign capital had no noticeable corrupting influence on the Soviet economic system, such as the White Guards had expected. Its role in the Soviet economic system amounted to approximately 10 per cent of the total production of the state enterprises. Even during the rebellion by the NEP bourgeoisie against the dictatorship of the proletariat it was unable to present a united front in support of the rebels, being divided instead into two groups, one of which remained neutral. Let us now pass on to this last attempt at capitalist restoration.

From the moment when the New Economic Policy was introduced, the acute manifestations of class struggle by all sections of the bourgeoisie and part of the petty-bourgeoisie against the proletarian dictatorship, which had reached their apogee in the Kronstadt rising, completely ceased. NEP gave sufficient scope for the time being for capitalist accumulation and in general for the development of capitalist relations, within the limits of what was economically possible for capitalism itself. The country’s productive forces had declined to such a low point that their development could proceed by a variety of paths, and the path of restoring capitalist methods in those branches where the state consciously held itself back could advance parallel with the restoration of large-scale industry by socialist methods. In regard to the restoration and intensification of individual petty production, given the lack at that time of objective factors for restoring it in the form of large-scale cooperative economy, this was absolutely necessary – it was the fundamental condition for the restoration of large-scale state industry. From this standpoint NEP constituted a combined method of restoring the economy using both socialist methods (planned state economy, large scale industry and transport, and so on) and purely capitalist methods (the market, capitalist calculation even in state industry, private capitalist enterprise in trade and industry, concession capital), and, finally, methods of petty commodity (mainly small peasant) economy.

In the first years all these methods got along quite well together. The territory in which they were applied was sufficiently spacious. But the fundamental directions in which the capitalist and socialist methods of restoration led were completely different. The elemental striving of all the capitalist forces and tendencies was towards relying upon the country’s petty-bourgeois basis, gathering strength, linking up with foreign capital and thereby linking it with the Soviet countryside, shaking off the restrictions which the socialist state imposed on capitalist accumulation, so as to transform it into socialist accumulation, overthrowing the Soviet state, denationalizing industry and placing again upon the country’s petty commodity production that capitalist summit which had existed in Russia before the revolution.

The task of socialism, on the contrary, consisted in using capitalist forms for the development of the productive forces only up to a certain stage, reducing the role of these forms to that of timber for building the house of socialism. It sometimes relied upon these capitalist forms where these represented a more progressive principle than petty production (an average capitalist enterprise was of a higher order than an artisan-type enterprise; orderly private trade, when petty commodity production prevailed in the country, was better than speculation and ‘bagmanship’; large-scale concessionaire capital was of a higher order than any of these forms). It adapted the capitalist forms, as being the lower, to the higher, socialist forms, wherever, whenever and to whatever extent this was possible and useful for socialism; doing away with them where such adaptation was impossible or unnecessary and they could be replaced by the higher, socialist forms. The task further consisted in enabling petty commodity farming to develop at the expense of petty natural, subsistence farming. The task was one of leaning temporarily with one foot on capitalist relations, then freeing this foot and bringing petty rural production right up close to large-scale socialist industry and organizing it co-operatively.

Today we find laughable the fears of our grandfathers who, occupying such positions as large-scale industry, transport, wholesale trade, banking and the control of the currency, and wielding a powerful state machine and army, were afraid that they might be ousted and beaten by the Kolupayevs and Razuvayevs [1], that is, by the representatives of an historically more backward mode of production, which was then on the downgrade in all capitalist countries. But we must not fall into an error to which we are psychologically exposed. For instance, the feudal serf-owning mode of production and the form of property corresponding to it could not beat the bourgeois forms after the big factory had made its appearance and the bourgeois revolution had placed the Third Estate in power; this, however, did not render hopeless all attempts at feudal counter-revolution, without exception. In France itself several revolutions were needed before the bourgeoisie was stably in power. It was the same in Soviet Russia in the epoch of NEP. The capitalist form, represented by squalid speculative capital and the reviving kulak element in the countryside, was a lower form compared with socialism, and the fundamental line of development was for these forms to be adapted to the socialist forms, just as in their time the beaten but not crushed feudal forms were adapted to the bourgeois forms. This, however, did not put out of the question the possibility of capitalist restoration in certain instances. On the whole the victory of socialism in the 20th century was a certainty, but this did not mean the invariable and unconditional failure of all counter-revolutionary bourgeois uprisings. What happened depended in each specific situation on the actual balance of forces. This is how things stood in Soviet Russia in the period under examination.

Let us see what the balance of forces was between the two types of economy and between the class groupings each of which represented a distinct mode of production. Measuring the balance of forces means first and foremost measuring the balance of economic forces and calculating the cultural level of the contending groups. The capitalist forces were: private trade, small and medium, private medium industry (mainly leased enterprises); the economy of the kulak and well-to-do strata in the countryside, making up the bulk of farming for the market; foreign concessionaire capital. In addition one must take into account the kulak co-operatives, the clergy, the bourgeois intelligentsia and, finally, those remnants of the former ruling classes which, though they had no economic weight, nevertheless possessed ‘living human weight’. All these elements oriented themselves above all on the middle peasantry, trying to secure the support of this infantry numbering many millions which, owing to its intermediate class position, played in history now the role of infantry of the revolution, now that of cannon-fodder of the counter-revolution.

The socialist forces were: the urban proletariat, which was at the end of this decade no longer de-classed as it had been at the beginning and which was no less numerous than before the war; the poorest strata of the peasantry and that enormous mass of weak peasants who utilized long-term preferential credit and the fate of whose economy depended on the Soviet state; that section of the petty-bourgeois intelligentsia which had accepted socialism, and which made up the majority of the personnel of the state machine. Finally the purely political forces of the Communist Party, the Young Communist League, the Red Army and the state machine. As regards the size of the national income which each of these groupings represented, the state’s represented the larger share, if one does not include the production of the middle peasant economy in either grouping.

As for cultural level, the state socialist group was, if not higher then not much lower than its adversaries. During this decade the proletariat and its state understood the great danger threatening it through the cultural superiority of the defeated classes, and much work was done to raise the cultural level of the entire proletariat.

The immediate socio-economic causes of the movement were these. Private trade in the towns, having succeeded in getting under way on a stable basis, began to be systematically ousted from its positions by state and co-operative trade, while taxes ate up a substantial share of trading profits, and the State Bank took a certain share in the form of interest on loans. The well-to-do section of the peasantry, which was subjected to progressive taxation, found itself restricted in its attempts to exploit poor peasantry, and was unable to devote itself peacefully to capitalist accumulation, became embittered and strove to break the chains laid on it by the socialist state. Medium industry too was hostile to the state, complaining of the burden of state taxes and leasehold charges.

But there was no unanimity in the bourgeois camp. A number of capitalist enterprises, both trading and industrial, were so intimately woven into the whole economic organism that they were deprived of any freedom of movement, while they also feared that, in the event of failure of the attempt at bourgeois restoration, they would lose everything they had acquired under NEP. Nor was there unanimity in the camp of foreign capital. In principle, from the standpoint of the class interests of the bourgeoisie generally, all the foreign capitalists were for the bourgeois restoration. But in relation to the actual concrete attempt at restoration, interests diverged. Victory for the counter-revolution with the existing international grouping of forces meant the ousting of German capital from Russia in favour of French capital. And as the bourgeoisie is usually guided in making a decision by the advantages of the current moment, German capital proved to be against the bourgeois restoration, owing to its antagonism to French capital. French capital itself, which supported the restoration, had no substantial economic influence inside the country.

The ideologists of the counter-revolutionary movement were representatives of the bourgeois intelligentsia. Among this intelligentsia, however, a section of the most important specialists were against the restoration. Certain changes had taken place in this milieu since the October Revolution. As you know, the majority of the Russian intellectuals fought against the autocracy under a socialist flag. But this socialism of theirs was merely a pseudonym for bourgeois democracy, as was shown by October, which hurled all the intellectuals into the camp of bourgeois counter-revolution. Ten years of building a large-scale socialist economy under Soviet power, a process in which bourgeois specialists also took part, had, however, forced some of them to carry out a reassessment of their values. By the experience of economic construction, and especially by the experience of electrification. they were convinced not only of the social but also, and above all, of the technical superiority of socialist over private capitalist economic forms. And when they smelt in the air the bourgeois-kulak counter-revolution, which might and indeed must hold up the development of large-scale industry and throw the country back to its pre-war position, this section of the specialists sided with the proletariat for the state form of economy. Another section of the intelligentsia, mainly from the former émigrés who by this time had mostly returned to Russia, took the lead in the counter-revolutionary movement. But these were not representatives of the Cadet elements among the former émigrés. The old Cadet orthodoxy, incorrigible and discredited, was squeezed out by the Smenovekhovtsi. The latter were an organized ferment, on Russian territory, not only among the returned émigrés but also among the intellectuals who had remained in Russia. They gave the intelligentsia an ideology and reconciled it, provisionally, to the Soviet power. Later they split, and their right wing headed the restoration movement. The slogans were: defence of economic liberalism, struggle against restrictions on private economy, struggle against increased taxes on private production, struggle against the continuous increase in wages, which in their opinion had a hindering effect on economic development, struggle for universal suffrage and a parliamentary system. In addition, they preached violent anti-Semitism. The new bourgeoisie had of course, its own literature and Press, partly legal, partly based abroad. In the first years of NEP the new bourgeoisie, especially the trading bourgeoisie and the kulaks, were rather in different to the ideological activity of the bourgeois intelligentsia. They were busy accumulating and had no time for politics. Moreover, the old-fashioned ideology of the intellectuals was little understood psychologically by the new bourgeoisie. Soon, however, the bourgeois intelligentsia found a way to the soul of the Nepman in town and country, adapted itself to his requirements and began to manufacture the ideology he needed.

The movement began in the towns, with large demonstrations, in which the urban traders played the most active part. By mutual agreement they simultaneously increased the prices of all goods, blaming this on high taxation, and in this way tried to draw the mass of consumers into the movement. This movement in the towns was joined by the well-to-do elements in the rural areas, who refused to pay their taxes to the state and gave support to the opposition of the urban traders. All this stir, however (except in some areas in the borderlands, where kulak banditry began), proved unable to assume the form of an open armed and organized struggle against the Soviet power, and was crushed before it could create an organizational centre for all Russia. The representatives of the bourgeoisie who were involved in the movement had their property confiscated. Groups of urban traders suffered especially. The shops belonging to them were nationalized and included in the network of state co-operative stores, and their stocks of goods were requisitioned by the state. The co-operative associations of the kulaks were also broken up and the co-operative organizations of the poor and middle peasantry strengthened at their expense.

The kulak strata which participated in the movement were subjected to heavy fines, which, however, did not crush their economy. The ‘Communist reaction’ which followed the suppression of the movement, though it did not create a new situation, nevertheless hastened the socialization of those branches of trade and industry which were ripe for it. In particular, the rout of private trade led not only to the strengthening of state and co-operative trade, it also facilitated a change in the relationship between what private trade survived and the state. This private trade became more and more transformed into something like trade carried out on commisson for large-scale state industry, and in this way was included in the system of planned state distribution.


1. Gangster types appearing in the works of the Russian satirist Saltykov-Shchedrin. [Trans.]

Top of the page

Last updated on 24.1.2009