Leon Trotsky

World Unemployment
and The First Five Year Plan

Introduction to Ceylon Edition

by Colvin R. de Silva

Economics is a sombre teacher. It teaches the hard way. But, as in the case of every good teacher, its lessons are concrete. It teaches through experienced facts.

The experienced facts of economics are certainly teaching the UNP Government and its capitalist backers some important lessons currently. Scouring the world for rice and seeking to sustain the price of rubber, they have discovered that the world economy of today consists not only of the imperialist orbit but also of the Soviet orbit. Failing to find either rice or sustenance for rubber prices in the imperialist orbit, they have been driven, to look towards the Soviet orbit. Such is the origin of the announced Trade Mission to China.

To us of the Samasamaja persuasion the UNP Government’s decision to send a Trade Mission to China constitutes a major political victory. It is, moreover, a victory not only over the UNP Government but also over its international patron, American Imperialism. It is a blow to American Imperialism’s effort to block any economic relations between Ceylon and the countries of the Soviet orbit. It is a breach in American Imperialism’s attempted economic blockade of the USSR, Eastern Europe and China. It is the first step towards making the Ceylon Government’s formal recognition of the new Chinese People’s Republic a reality.

Victories should not only be events for celebration but also occasions for intensifying the effort to build on them. The Government’s decision to send a Trade Mission to China must be made the occasion to intensify our efforts to compel it to establish with the countries of the Soviet orbit economic and political relations at least as thoroughgoing and systematic as Ceylon's existing economic and political relations with the countries of the imperialist orbit. To fail to do this would be to fail the struggle for Ceylon’s complete independence in an important respect. On the other hand, to carry forward the struggle for the establishment of such relations will also be to carry forward the struggle for Ceylon’s complete independence in an important way.

The publication in Ceylon at this juncture of the two articles by Leon Trotsky which follow is intended to be a direct contribution to the struggle to compel the establishment of proper economic and political relations between Ceylon and the countries of the Soviet bloc. These articles were written in 1930; that is to say, when the real and terrible dimensions of the Great Depression of 1929-33 were becoming manifest beyond challenging. They constitute an effort to combine in a single concrete programme of activity the struggle of the working class in the capitalist countries against unemployment and the high cost of living, and the struggle of the self-same working class to help the Soviet Union’s economic development. They propose what was then a novel line and content of revolutionary agitation in the conditions of depression and unemployment in the capitalist countries juxtaposed with the planned development of the Soviet economy. So novel indeed did it seem then that the Stalinists did not hesitate to subject it to the crudest public attack as appears from the second article, which is a reply to such an attack in the Czech Stalinist paper, Rude Pravo. Nevertheless, as the reader will readily see, the proposal would be taken almost as a commonplace today. Such has always been the fate of successful pioneers in the field of political thought.

Trotsky’s proposal, although it proceeded from a profound understanding of the problems posed for the international working-class both by the Great Depression which began in 1929 and by the First Five Year Plan in the Soviet Union, was indeed startlingly simple. Said he in the article entitled World Unemployment And The Five Year Plan: “By all these circumstances, the Communist Parties of the West are placed before the task of linking up, in their agitation, the question of unemployment with the most essential factors in world development, and, in the first place, with the economic development of the Soviet Union.” This he further pointed out, made it necessary, among other things, “to demonstrate that many tens, and later on hundreds, of thousands of workers would be able to find work in the annual, planned orders by the Soviet Union for machinery and agricultural implements” and “to explain that through these conditions the Soviet Union would receive the possibility to export a far greater quantity besides lumber and other raw material; – of grain, butter, meat and other products of consumption of the broadest masses.”

Moreover, he pointed out: “The importation of machinery and the exportation of raw material and food products could, by an adequate agreement, be set into direct dependence upon each other, on the basis of an extensive plan, equally accessible to the understanding and the verification of the Soviet as well as the foreign workers.” In other words, a long term trade agreement between the Soviet Union and the capitalist countries would be to the mutual benefit of both in that it would help to relieve unemployment in the capitalist sector and to remove certain obstacles to rapid economic development in the Soviet sector.

This proposition, treated as novel and singular then, has a quality of obviousness today. And yet, it has had to be taught anew to those in power in Ceylon today. They have agreed to go to China only under economic duress.

The relevance of Trotsky’s 1930 proposal to today’s conditions in Ceylon require little stressing. Ceylon is in economic difficulties. The prices of its export products have fallen precipitately and are continuing to fall steadily, if more slowly. This fact is tending to induce depression conditions. Dismissals have actually begun, even if they are not yet on a mass scale. That is to say, a certain contraction of our economy has already been set going. The Government faces a gaping budget deficit and the country a growing balance-of-payments deficit. The Government has therefore been compelled to slow down sharply on its developmental programme. Especially in face of our growing population, this means that both a further relative contraction of our economy and a further absolute restricting of employment opportunities has been set going by Government policy itself. The food-producing sector alone of our economy may make some advance in the present situation by reason of the risen food prices; but this advance cannot by any means compensate or even hope to compensate for the recession in the exports-producing sector which is our major source of money-income and of mass employment.

In the meantime this very rise in food prices has created another set of difficulties. We still have to import food on a large scale to feed our population. The financing of these imports is becoming increasingly difficult in face of the decline in our income from exports. In any event, it adds seriously to our balance-of-payment difficulties. And, as if to cap it all, there is no rice to be obtained for the love of money.

There is a further aggravating side to the situation. What with the fall in export income and the increasing proportion of our national income which has to be devoted to paying for food imports in general and for rice imports in particular, the amount of money which we can utilise for the purchase of imported commodities is sharply reduced. This Would not, of itself, have been very serious if import-prices also had fallen in step with the fall in our export-prices. We could then hare financed the same volume of imports as before with the reduced income. What has happened, however, is not only that import-prices have not kept step with the export price-fall but also, and which is worse, that import-prices have actually maintained themselves and even risen instead of falling at all. In the result, our importing capacity has been sharply reduced. The physical volume of our imports has already fallen and will continue to fall.

The principal impact of this development is on the standard of living of the masses. This is because the main mass of our imports consists of goods consumed 'by the broad masses. Any restriction in the volume of these imports, quite apart from the price question, must therefore result in a reduction of their standard of living.

Such then is the economic prospect for this country today:

the growing contraction of our economy, growing unemployment, a falling standard of living. All this, in turn. because of the fall in the prices of our export products and the contradictory movement of the prices of our imports. Our task therefore is, obviously, to find a means of reversing these two trends; that is to say, to stop the fall of our export-prices and to raise them again if possible, and to drive import-prices down if possible.

What this situation demands of us, obviously, is a search for new markets to export to and new sources to import from; that is to say, the expansion of our trading area. And, in the present world situation, the avenue for such expansion lies ready to hand. For, a specific feature of the current world situation is not only that the world is divided into two power-blocs but also that the world economy itself is substantially sundered as a result of deliberate imperialist policy. The imperialists have sustainedly endeavoured to limit and even wholly prevent systematic and developing economic relations with the countries of the Soviet bloc. But this attempt to continue, in different circumstances, the traditional imperialist policy of economically blockading the Soviet Union, today results only in converting the international economy into two almost self-contained units or circuits which have little effective contact with each other. One half of humanity is effectively separated from the other in matters economic by an imperialist-imposed iron curtain on trade with the Soviet bloc of countries.

That this situation stunts the economic development of both halves of the world economy will be obvious to anybody. That it certainly is stunting Ceylon’s economic development is plain to those who have thought over the impact of China’s rubber purchases on rubber prices. The experience constitutes a living demonstration of the advantages to be gained by expanding the area of our international trade. Rice, too, is providing us with a similar experience. We can apparently get to badly needed rice supplies if we will only go beyond the imperialist-imposed iron curtain in the trade field. We have to trade to live. It is now being borne in upon us that we must trade with thc whole world, and not only with half of it, in order, literally, to live. Why, then, limit the effort to expand our trade into the Soviet-dominated area only to buying rice or even making a deal for exchanging rubber for rice? Why should we not immediately set about seeking to expand our trade with these countries over the whole field of our exports and imports? Why not indeed? For, only then will we be rendering real, not only in the economic field but at all, the alleged foreign policy of our Government, viz: friendship with all countries; hostility to none!

We shall conclude with a fundamental point. If it is necessary, for our very existence, as we have shown, to aim at systematic and developing economic relations with the countries of the Soviet Bloc, then it is also necessary to establish systematic and sustained political relations with these countries, For, it is impossible to establish systematic and developing economic relations with a country or group of countrle8 without maintaining systematic and continuous political relations with such a country or countries. The question of ideological sympathies has no place here: economic relations are a business question and political relations are a business necessity. And what both economic relations and political relations require is not either a mere Trade Mission or even a Political Mission but a permanent channel for the linked relations of Ceylon with these countries. We have Embassies in London and Washington. Why shouldn’t Embassies be established also in Peking and Moscow? Why not indeed? Unless, of course, we are not free to do s& If that be indeed the ease, thee, the struggle to establish trade relations with the Soviet Bloc is also very much a part, and a vital part, of our struggle for complete independence. The economic road to Peking and Moscow coincides with the political road from Ceylon’s present semi-colonial status to complete independence from Imperialism.

Colombo, Ceylon,
Trotsky Day, 1952

World Unemployment Index

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Last updated on: 31.1.2007