Leon Trotsky

Soviet Economy in Danger

The Situation on the Eve of the Second 5 Year Plan

(October 1932)

Written: 22 October 1932.
Source: The Militant, Vol. V No. 50, 17 December 1932, p. 4.
Transcription/HTML Markup: Einde O’Callaghan for the Trotsky Internet Archive.
Copyleft: Leon Trotsky Internet Archive (www.marxists.org) 2014. Permission is granted to copy and/or distribute this document under the terms of the Creative Commons Attribution-ShareAlike 2.0.

(Continued from last issue)

But one of the most important disproportions consists in the fact that the availability of money. In the language of monetary circulation, this is what is called inflation. In the language of planned economy this signifies exaggerated plans, incorrect division of forces and means, in particular, between the production of objects for consumption and the production of means for production.

From that time when the correlation of prices began to turn against the city, the latter safe-guarder itself by “freezing” the goods, i.e., they were simply not put into circulation, but kept in hand to be distributed bureaucratically. This signified that only the pecuniary shadow of the scissors had closed its blades, while their material disproportion still remained. But the peasant is little interested in shadows. The absence of commodities has pushed him and continues to push him in the direction of a strike in breadstuffs: he does not want to part with hie grain for money.

Not having become a matter of simple and profitable exchange for both sides, the provision of foodstuffs and agricultural raw material has remained as hitherto “a political campaign”, “militant drive”, requiring each time the mobilization of the State and party apparatus. “Many kolkhozes”, Pravda cautiously reports (September 26), “resist the collection of grain, hiding their stocks”. We know what the word “many” signifies in such a context. If the exchange between the village and the city were advantageous, then the peasants would have no cause whatever to “hide their stocks”; but if the exchange is not advantageous, i.e., if it takes the form of compulsory transfer, then all the kolkhozes, and not “many” as well as the individual proprietors. The duties of the peasants in supplying meat provisions are officially invested at present with the character of a natural tax in kind, with all the ensuing repressive consequences. The economic results of the 100 percent collectivization are designated much more correctly by these facts than by the bald statistics of collectivized hectares.

The fact that severe laws were passed against spoliation of socialist property sufficiently characterizes the extent of the evil, the gist of which, in the village, consists in the fact that the peasant strives to direct his grain not into the socialist, but the capitalist channels. The prices on the speculative market are high enough to justify the rise of capital punishment. What part of the foodstuffs is diverted into the channels of speculation?

In the Volga-Caspian fish trust, it is reckoned that 20 percent of the catch goes to the private market. “And how much really does go?” asks Pravda skeptically. In the rural economy the percentage of the drain should be considerably higher. But even 20 percent means hundreds of millions of poods of bread. Repressions may become inevitable measures of self-preservation. But they cannot replace the establishment of the link, they do not create the economic foundation for the dictatorship of the proletariat, and they do not even guarantee the provision of foodstuffs.

The authorities, therefore, could not stop merely with repressions alone. In the struggle for foodstuffs and raw materials they found themselves compelled to order the city to liberate the village. While in the cities, particularly in the provinces, the State and cooperative stores have become depleted.

The balance of “the link” with the village during this year has not as yet been taken. But the trading channels of the cities are exhausted. “We gave more goods to the village,” said Kaganovich in Moscow on October 8, “and, if I may use the expression, we have offended the city.” The expression is absolutely permissible: the cities and industrial districts have been offended, i.e., the workers. [1]

The Conditions and Methods of Planned Economy

Of what sort are the organs of constructing and applying the plan? What are the methods of checking and regulating it? What are the conditions for its success?

Three systems must be subjected in this connection to a brief analysis: (1) special state organs, i.e., the hierarchical system of plan commissions, in the center, as well as locally; (2) trade, as a system of market regulation; (3) Soviet democracy, as a system of living reaction of the masses upon the structure of economy.

If there existed the universal mind, that projected itself into the scientific fancy of Laplace; a mind that would register simultaneously all the processes of nature and of society, that could measure the dynamics of their motion, that could forecast the results of their inter-reactions, such a mind, of course, could a priori draw up a faultless and an exhaustive economic plan, beginning with the number of hectares of wheat and down to the last button for a vest. In truth, the bureaucracy often conceives that just such a mind is at its disposal; that is why it so easily frees itself from the control of the market and of Soviet democracy. But, in reality, the bureaucracy errs frightfully in its appraisal of its spiritual resources. In its creativeness, it is obliged perforce, in actual performance, to defend upon the proportions (and with equal justice one may say, the disproportions) it has inherited from capitalist Russia: upon the data of the economic structure of contemporary capitalist nations; and finally, upon the experience of successes and mistakes of the Soviet economy itself. But even the most correct combination of all these elements will allow only of constructing a most imperfect wire skeleton of a plan, and not more.

The innumerable living participants of economy, State as well as private, collective as well as individual, must give notice of their needs and of their relative strength not only through the statistical determinations of plan commissions but by the direct pressure of supply and demand. The plan is checked and, to a considerable measure, realized through the market. The regulation of the market itself must depend upon the tendencies that are brought out through its medium. The blueprints produced by the offices must demonstrate their economic expediency through commercial calculation. The system of transitional economy is unthinkable without the control of the rouble. This presupposes, in its turn, that the rouble equals itself. Without a firm monetary unit, commercial accounting can only increase the chaos.

The processes of economic construction are not as yet taking place within a classless society. The questions relating to the allotment of the national income compose the central shaft of the plan. It shifts with the direct development of the class-struggle and that of social groups, and among them, the various strata of the proletariat itself. These are the most important social and economic questions: the link between the city and the village, i.e., the balance between that which industry obtains from rural economy and that which it supplies to it; the interrelation between accumulation and consumption, between the fund for capital construction and the fund for labor wages; the regulation of wages for various categories of labor (skilled and unskilled workers, government employees, specialists the managing bureaucracy); and finally, the allotment of that share of national income which falls to the village, between the various strata of the peasantry – all these questions by their very nature do not allow of the a priori decisions of the bureaucracy, that has fenced itself off from the interference of interested millions.

The struggle between living interests, as the fundamental factor of planning, leads us into the domain of politics, which is concentrated economics. The instrument of the social groups of Soviet society are (should be): the Soviets, the trade unions, the co-operatives, and first of all the ruling party. Only through the inter-reaction of the three elements, State planning, the market, and Soviet democracy, can be realized the correct management of the economy of the transitional epoch, and only thus can be assured – not the complete surmounting of contradictions and disproportions within a few years (this is Utopia!) – but their mitigation, and, through just that, the strengthening of the material bases of the dictatorship of the proletariat until the moment when a new and victorious revolution will widen the arena of socialist planning and will reconstruct the system.

(To be continued)


1. In 1929, Preobrazhensky, justifying his capitulation, prophesied that with the aid of the Sovkhozes and the Kolkhozes, the party would force the kulak to his knees within 2 years. Four years have elapsed. And what have we? If not the kulak – he has been “put out of commission” – then the strong middleman has forced Soviet trade to its knees, compelling it to offend the workers. As we see it, Preobrazhensky himself, in any event, was much too hasty in getting down on his knees before the Stalinist bureaucracy.

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Last updated on: 6 February 2015