Encyclopedia of Anti-Revisionism On-Line

Jerry Tung

The Socialist Road

Character of Revolution in the U.S. and Problems of Socialism in the Soviet Union and China

1. What Is Socialism?

Socialism is the transition from capitalism to communism. It is both the aspect-by-aspect negation of capitalism and the creation of the spiritual and material conditions for communism. This transformation can only take place under the dictatorship of the proletariat—workers’ rule—whereby state ownership of the main means production can be safeguarded. Socialism is not an ideal society without a trace of capitalism. By the very fact of its being a transitional society, there must be struggle and contradiction to destroy the old and build the new: both forward motion and setbacks.

From the standpoint of communism, socialism is immature. Today’s socialist countries like China and the Soviet Union are still immature socialism, the beginning of socialism. Mao said that socialism entails a relatively long historical period. He considered the transition to communism in terms of hundreds of years.[1] With this perspective it should be no surprise that socialism is imperfect and has serious shortcomings. While there is no doubt of its proven superiority over capitalism, colonialism, and neo-colonialism, socialism still has tremendous problems in relation to communism. Socialism in the real world develops in the midst of an era of imperialism and proletarian revolution. And while we must be critical of its shortcomings, (especially the weaknesses of leadership, including incorrect foreign policies and political lines), we must take a stand with socialist countries and resolutely side with them even in our criticisms.

Flunkyism, which is evident in practice here (e.g., Communist Party, USA’s blind following of the Communist Party of Soviet Union or Communist Party (Marxist-Leninist)’s uncritical acceptance of the Communist Party of China’s leadership), is at best immature communism in an advanced capitalist country; at worst it is straight power-brokering opportunism. It does harm both to proletarian revolution here in the United States and to socialist countries. It can either further the latter’s infighting and mistakes, or help perpetuate their sense of doctrinaire “correctness,” often empirical and nationalist habits. It straitjackets our revolution by trying to make it a carbon-copy of other countries’ revolutions.

Some people hold that presently-existing socialism is neither socialist nor capitalist but a third form of society. This is obviously eclecticism. These people are creating an unknown “black box” to explain away socialism’s problems without committing themselves to stand fundamentally with it and, based on that stand, to draw out lessons and implications to help our struggle here.

Yet even Lenin had problems and vacillated somewhat in defining the Soviet system in relation to state capitalism during the early years of Soviet power. For a while he refused to call the agricultural sector socialist and would describe only the state-owned sector as socialist. Under the conditions of the dictatorship of the proletariat, that’s exactly how a socialist state looks—it is a mixture of state ownership, collective ownership and private ownership. But there was good reason for him to refer only to the state-owned part as socialist. He was not saying that there are “two states” in the Soviet Union in terms of state power. State power was in the hands of the proletariat, represented by the Bolsheviks. The state sector was socialist first because in that particular sector the basic contradiction of capitalism, the contradiction between private ownership of the means of production and socialized production, is most thoroughly resolved.

Socialist Economy Still Heterogeneous

Under socialism, though the state power is under the unified leadership of the working class represented by its vanguard party, the economy is still heterogeneous. Under workers’ rule the resolution of the basic contradiction of capitalism varies within the country. For example, in China in the early 50’s, many industries were still owned by the national bourgeoisie due to political considerations of the united front with that stratum. Even now China is an agrarian country where 90% of the population is peasantry and lives mostly in communes; those communes are not state-owned, but are under what is called collective ownership.

This reality of a socialist country basically raises the question: How can there be socialism in an agrarian society, in which the properties of capitalism (for example, socialized production) are not developed? Socialism is supposed to be an inevitable outgrowth of capitalism. Its superiority can only be fully unleashed when capitalism has fully run its course. That is historically true. There are particular problems to socialism in the contemporary world, because socialism has developed in relatively undeveloped agrarian societies, such as Russia was and China still is.

As historical materialists (and unlike the Trotskyites and those who explain these problems away as some strange, “deformed,” third type of society other than socialism or capitalism), we recognize that existing socialist countries are as genuinely socialist as they can be.

State power is the bottom line: the principle is to take it first, and then build socialism. The reasons are as follows. One, communists have seized state power first in countries which are the weak links of imperialism. This is good because it serves as a clarion call to people all over the world. Socialism is highly prestigious to the majority of these people. Two, in the era of imperialism, the entire world economy is shaped by the dominant form, imperialism and finance capitalism. A third world country or agrarian society cannot be politically independent for long unless it fights the clutches of imperialism or neocolonialism and becomes economically independent. No such country will be left to develop “pure” capitalism on its own, as did the first capitalist nations. Even laissez-faire capitalism’s development took the sweat and blood of the whole world; it was by no means a completely internal, closed-door affair. Third world countries today are inevitably clutched by the tentacles of imperialism. As long as imperialism exists, the capitalist development of an agrarian or semi-feudal society cannot be purely or mainly capitalist, it can only be neo-colonial or colonial. For such a country to have even a chance of independence, its only alternative in the real world is, in the final analysis, socialism—however limited socialism will be under those conditions. And whatever the limitations of socialism in an agrarian, semi-feudal society, it is far more humane and ensures a far more vigorous and speedy development than laissez-faire capitalism ever could.

Only this view grounds socialism in the real world, and it must proceed from the real world. Let’s now elaborate on the problems of socialism.

The present impossibility of universal state ownership in any socialist country is determined by the level of development of the productive forces. Any attempt to “skip past” this fact, such as Lenin’s early agrarian program,[2] will lead to disaster. The superiority of the socialist economic system is unleashed only to the extent that the means of production are state-owned. The fact that an agrarian country’s national economy is not highly developed and socialized limits the extent of state ownership. The existence of small producers and subsistence economies bring in the difficulties of planning and imbalance. To the extent that production is not socialized and not state-owned, and to the extent that there is scarcity and a great variety of independent subsistence economies, the less planning there can be and the more it is necessary to use the law of value. At exactly that point the problems of socialist planning and growth enter. Before discussing this, however, we must define more comprehensively the basic contradiction of capitalism and the problems of socialism in resolving it.

The Destructive Basic Contradiction of Capitalism

We must look at the difference between capitalism and socialism from a concrete, historical materialist point of view, that is, from a developmental point of view. We must recognize the dynamic unity of opposites and not proceed from one narrow subjective definition of socialism, such as “planned economy” or “labor power is no longer a commodity.” The unity of opposites, the poles that make up the contradiction of capitalism, are the private ownership of the means of production and socialized production. Through the overall transformation of society, socialism must resolve this particular contradiction of capitalism in order for humanity to move to a higher realm of freedom and necessity.[3]

Under capitalism, the private ownership of the means of production makes society-wide planning impossible and leads to a socially anarchistic process of social reproduction. At the same time, socialized production leads to an increasingly complex, interdependent, large-scale division of labor in all modern industrialized societies. This is the basic problem, and the essence of the destructiveness of capitalism.

This basic contradiction is the root cause of the impoverishment of the proletariat and the anarchy of production. Impoverishment of the proletariat and anarchy of production lead to periodic, ever more frequent, and ever more destructive breakdowns of the economy—and today’s rampant inflation and permanent stagnation. These breakdowns, and now the non-recovery of “stagflation,” mean tremendous destruction of the productive forces—idle plants and wasted generations of youth, as part of the most precious, unique productive forces, the workers and oppressed.

We must now look more closely at the aspect of private ownership of the means of production under capitalism. All pre-socialist societies are spontaneously organized and enslaved by that spontaneity. These societies are subjugated by the exploiting classes which are themselves subjugated by spontaneous organization. Most fundamental to this spontaneous organization are the production relations, consisting of l)the ownership pattern or ownership system of the means of production, 2)individuals’ roles in production and their mutual relations and 3)the pattern of distribution.

The ownership pattern refers to ownership of the means of production, including means of labor, such as machines, plants and land, and objects of labor, such as raw materials. The ownership pattern is the most important aspect of production relations. It is the basis of production relations and in the main determines the nature of production relations. All human societies, with different levels of productive forces, be they primitive, slave, feudal, capitalist, or socialist, are classified according to the differences in their ownership patterns of the means of production. The ownership patterns determine individuals’ roles in production, their mutual relations, and thus the distribution of products.

Capital—Essence of Capitalist Ownership

In this respect, we have to consider the “essence of ownership” of capitalism. The essence of ownership under capitalism is not the private ownership of the means of production and the social surplus in general, which also characterized slave and feudal societies, but rather the private ownership of the means of production and the social surplus in the specific form of capital. A study of chapters 5 and 6 in the Fundamentals of Political Economy shows that capital has a comprehensive character.[4] The character of capital is that it flows where higher profit can be made, where the higher exchange value can be realized, and not according to the use-value of things. The essence of capital is not how much an individual personally gains from capital, as Chang Chun-chiao advocated in his pamphlet “On Exercising All-Round Dictatorship Over the Bourgeoisie.”[5] Nor is it a question of a person’s independent power to direct the capital the way he wants. In other words, capital does not hinge on individual will. The main role of capital, giving rise to its destructiveness under capitalism, is not the degree of personal benefit in consumption, utilization and enjoyment at the expense of others. Yes, the capitalist can have all that. He can use his money any way he wants—he can spend it all, eat it up, drink it up, or even burn it. But that bundle of money ceases to be capital. The basis for capital is the return of the money to circulation, for reinvestment based on exploitation. Used for one’s own consumption or enjoyment, it is just individual wealth; it is not capital.

Capitalists not only do not direct the capital, but in fact are themselves directed by and enslaved by capital, as Marx said.[6] Capitalists don’t even have the option of choosing where to invest their capital because the area of investment (the area of profitability) is virtually determined in the era of imperialism by stagnation in the basic industries, pigeonholing of advanced technology and parasitism. Even if the capitalists want to rebuild the auto industry, they cannot buy auto stocks and build up the industry. Circumstances—in this case the lack of purchasing power of the masses to buy the cars—have made decisions for the capitalists and limit the options open to finance capital today.

Capital spontaneously flows wherever the most profit can be made. There is no society-wide overall planning under capitalism, nor can a capitalist economy as a whole be a planned economy. The interests of the capitalists are individual interests.

Under the system of private ownership of the means of production, the capitalists all fight for their own immediate interests, the interests of a particular company or sector. By their very nature, that is their sole consideration. Thus they come into antagonistic conflict with other capitalists, other sectors and other industries. Under capitalism there is nothing to prevent anyone with capital from producing identical products as long as the goods can be sold. Conflicts and waste inherently exist because products are duplicated. And there is even a contradiction in artificially creating demand and falsely advertising simply to sell these hyped products. So it is clear the private ownership precludes planning. This is true within each sector as well as for any sector’s relation to other sectors.

Let me elaborate a little. First of all, the capitalists don’t sit down together and plan (except to monopolize pricing and markets, which further destroys the basis for capitalism), and there’s no interest for them to do so. For example the car manufacturers and transportation industry in general, and the big oil companies and the energy industry as a whole, are obviously interdependent. It would seem in the best interest of the auto and other transportation manufacturers to plan with the big oil and energy companies to keep prices down so that sales of vehicles would increase. But that is not the case. Their lack of cooperation clearly undermines the American auto industry, and thus the American economy as a whole, since over a million industrial jobs in this country are auto jobs. Most American cities like Detroit and Los Angeles were built in a way that purposely discouraged public transportation. Workers have to buy cars to go to work or shop. The “energy” companies (or sector) are now in direct contradiction with the “transportation” companies (or sector). That antagonistic contradiction cannot be resolved as long as there is private ownership of the means of production.

Even if a finance capitalist owns both General Motors and Exxon, for example, and has overlapping interests, he still cannot plan and coordinate policies with other capitalists. Why?

Because as long as many different oil corporations exist, there is competition among them. As long as there are different domestic and foreign auto manufacturers, some producing more fuel-efficient cars than others, the manufacturers are constantly driven to compete with each other. This adds to the independent momentum which prevents them from coordinating different sectors.

For example, if Exxon were to raise the price of gas, but Texaco wanted to lower the price to help the American auto industry, it could not do so. Texaco would not get enough windfall profits to attract investors, or to invest in new oil fields and explorations. Without the profits, they cannot compete. In the long haul, they would be swallowed up by their competitors in the energy field. Texaco capitalists would not be able to diversify as much as their competitors in order to survive in the coming period. Nor could they increase their productivity and lessen their vulnerability by swallowing up smaller companies in the economic crisis. Nor would they be able to concentrate efforts to monopolize other sectors, having reaped windfall profits in one sector (such as gasoline), and force their competitors out of other sectors (such as diesel, plastics and other petro-products). Even if two companies in two interdependent sectors want to cooperate, they cannot, because of the competition within the sector. This is just one example of why there cannot be a planned economy as a whole under capitalism.

A planned economy under socialism is not only necessary, but it is also the only economic foundation capable of eliminating class exploitation. But economic planning on a national scale necessarily precludes the private ownership of the means of production. That’s why we have to compare socialism with capitalism from the standpoint of socialism resolving the basic contradiction of capitalism rather than seeing it as simply planning, or as altering the character of labor power.

The economies of the Soviet Union and China are mainly planned. By planning, I mean larger overall planning—control of the finance and heavy industry, and a planned maintenance of overall balance between agriculture and industry, consumption and production, etc. There is conscious control of the national economy. This is the strongest indication that ownership is public and labor power is not a commodity, and this indication is confirmed by the fact that there is no impoverishment. The absence of boom-and-bust cycles proves the lack of impoverishment. So as long as there is planning and no impoverishment of the masses, it cannot be said that capitalism has been restored. (See Table 1.)

Incorrect Arguments on Capitalist Restoration

Based on understanding the character of capital, we refute the two major theoretical works which came out of China after the Cultural Revolution regarding the restoration of capitalism. (The view that the Soviet Union had restored capitalism emerged only around 1970-71.) They are “On Exercising All-Round Dictatorship Of the Bourgeoisie” by Chang Chun-chiao and ”On the Social Basis of the Lin Piao Anti-Party Clique” by Yao Wen-yuan.[7] They contain several incorrect lines.

Two Pamphlets from China

Chang’s main thesis assumes that capitalism has been fully restored in the Soviet Union. He then proceeds to project some of the dangers in China, and thus the magnitude of the struggle to oust the capitalist-roaders, which he views as an antagonistic contradiction. Here let me just address his economic argument. His premise is that even though the forms of ownership were changed in the Soviet Union, i.e., from private to public and in appearance nobody owns stocks, factories, etc., the essence of ownership is the same as under capitalism. He reasons as follows: a bureaucrat high in the party has power and essentially can direct capital wherever he wants. He will benefit from that position of power as capitalists do under capitalism. He has chauffeurs, limosines, mansions, dachas, private planes, and even servants. Chang said that’s why the essence of ownership has changed back to the capitalist mode since Khrushchev came to power.

But that argument is narrow. It is based on fundamental ignorance of the “essence” of capital. It is a typical prejudice of Narodnik-like socialists, who tend to base their world view on the narrow experience of a commodity-scarce society. They typically view anyone who wastefully consumes and who has privileges as “bourgeois.” This view loosely mixes up feudal lords and bureaucrats with capitalists.

Chang’s contention of the “bourgeois” essence of ownership of collective surplus under socialism is actually the accusation that the character of ownership in the state sector is private. But even if he could establish that, he cannot prove that capitalism and its characteristic and attribute have been restored. As we know, slavery, feudal and capitalist ownership are all different forms of private ownership. But the private ownership under capitalism is unique, i.e., the singular behavior of capital established by Marx. And it cannot be anything else but that.

The fact that there are no cyclical economic crises in the Soviet and Chinese economies is an indication of planning and therefore, the dominance of the non-private character of ownership. This non-private “essence” is the entire difference between socialism and capitalism. While capitalism made large scale industrial production and reproduction possible and pushed society forward from feudalism, capital was destructive even in the early, laissez-faire period. Capitalism destroyed and wasted productive forces, including humans, on an evil grand scale. Social reproduction was achieved in the midst of anarchy and the forced ripping off of the workers. The masses absorbed the brunt of the crisis just so capitalist production could regroup itself spontaneously again.

This destructiveness and structural spontaneity do not exist in the U.S.S.R. and China. Even though there is waste, inefficiency, and dislocation (which I will go into later), they are in no way comparable in scale or magnitude to countries where private ownership of the means of production dominates. Waste, inefficiency and dislocation are not inherent in socialist economies.

From the standpoint of industrial manufacturing, distribution and their servicing, the goods produced in Russia and China cannot compete in the western markets. They are crude and the production process is wasteful. But taken as a whole socially, the economies are a hundred times more “efficient,” less wasteful than capitalism, and thus more humane.

Arguments by Nicolaus and RCP

There are also a couple sinister arguments put forward by Martin Nicolaus, a former Communist Party (Marxist-Leninist) member and by the Revolutionary Communist Party (RCP), which must be refuted. Nicolaus said there is no cyclical crisis in the U.S.S.R. because that society is going through a primitive accumulation process.[8] As primitive accumulation is precapitalist, cyclical breakdowns will not be seen for another 50 years. Nicolaus hopes his argument is good for another 50 years. But the U.S.S.R. and China have already “taken off” as industrial states with comprehensive economic bases and infrastructures. They don’t need “primitive accumulation” to build their first machine-tool industry. Indeed they have gone beyond that. Nicolaus’ argument is a clumsy attempt to challenge a simple, factual reality.

Second, the process of primitive accumulation is crude and extreme. It uses methods like child labor, squeezing peasants off the land to become “free laborers” and colonial plunder as well as credit tricks. There is far less child labor (if any) in the U.S.S.R. than in the United States, which has gone far past the stage of primitive accumulation. Nor is there any forcing of peasants off the land. If anything, Russia and China have the opposite problem. There are hardly any peasants left in the U.S.S.R. Rural workers have to be paid higher salaries to keep them on the state farms. Better conditions in industrial cities are attracting young workers to urban centers. This is in contrast to the period of primitive accumulation of capitalism when cities were much more exploitative and oppressive than the countryside was.

The RCP’s argument that the Soviet Union is a state monopoly capitalist country similar to Hitler Germany, where a war economy temporarily suspended the private sector of capitalism, is as ridiculous as Nicolaus’ argument.

State monopoly capitalism is still based on the private ownership of the means of production, even though the state plays a greater role in planning certain aspects of the economy which affects our lives. A crucial difference from socialism is that state monopoly capitalism still serves the interests of the handful of private capitalists, even though it appears to have more planning and greater concern for labor and other “interest groups.”

The most reactionary and biggest German monopolies backed Hitler’s takeover. They were defeated by other imperialists and their only chance to expand and survive was to become bigger, without being swallowed up by English, French and American monopolies. They were willing to “liquidate” temporarily to the government, based on their racist and imperialist belief that Germany would win. But these German monopoly capitalists continued to own the means of production and accumulate gigantic profits throughout the Nazi regime and the war. Afterwards, the victorious American and British capitalists made good on Hitler’s promise and gave Krupp back to Krupp.

The Soviet economy today is predominantly state-owned and the collective surplus is invested into productive industries rather than into speculative industries for pure profits. I will go into this later. First let me elaborate on state monopoly capitalism.

State Monopoly Capitalism Based on Private Ownership

State monopoly capitalism is a necessity for capitalism. It is an outgrowth of earlier laissez-faire capitalism. It is not a more progressive form of capitalism with higher degrees of freedom. State monopoly capitalism developed because of capitalism’s inevitable crises and boom/bust cycles, due to the impoverishment of the proletariat, anarchy of production, and the resulting crises of relative overproduction.

The trick the capitalists found to counter those cycles, to recover from busts like the 1929 crash, was Keynesian economic strategy. They print more money so the state can give it out as low-interest loans to different sectors in order to stimulate the economy and pull out of periodic busts. The state plays a larger and more direct role in the economy. The state stimulates the economy and gets it rolling, basically by increasing the money supply to stimulate an otherwise stagnating capitalist economy. But the problem is the more they do that, the more the economy depends on the state, rather than being based on market forces.

That’s why today the U.S. government’s budget is so enormous, some 300-400 times higher than in the 1930’s and 40’s. The national deficit has also swollen, over and beyond state, local and individual debts. The state not only finances the military to provide employment (armed service payroll and production of weaponry) and keep the economy rolling, it also finances “consumer” sectors like auto and steel now that U.S. industry is no longer competitive. The U.S. government bureaucracy has become the largest employer, either directly or indirectly hiring one out of every three in this country. All this comes through Uncle Sam paid from workers’ tax money, and the surplus value from workers’ sweat and blood. Since World War II, state monopoly capitalism has become an integral and interwoven part of the national economy. The extent to which there is state monopoly capitalism is the extent to which certain aspects of the economy can be “planned.” But that should not be mistaken for the overall social planning under socialism, the real planning to abolish the destruction of productive forces under capitalism’s cyclical crises. Socialist planning is planning in the interest of the producers—the workers and the whole society.

An example of state monopoly capitalism’s workings is New York City’s Health and Hospitals Corporation (HHC), which runs the city hospitals and decides which to keep open and which to close, which services to increase and which to cut. The city hospitals seem to serve the workers and poor, so isn’t that a good thing? Isn’t that a sign that there’s planning under capitalism? Isn’t that a socialist aspect of America?

On the contrary. The purpose of the HHC and other “nonprofit” corporations, the Tennessee Valley Authority (TVA), set up by the government is to reap profits for the capitalists and not the masses. It is no longer profitable for the capitalists to own and run service sectors like hospitals, railroads and the postal service. So the government steps in with the workers’ tax money to let private capitalists exploit any still-profitable aspects and to reduce the risks for the capitalists who invest in these sectors.

For example, manufacturing locomotives, trains, hospital equipment, pharmaceutical products, and construction of railroad tracks and hospital buildings are profitable. The only way to guarantee private capitalist profit in these sectors is to relieve them of the losses that come along with running a hospital or railroad—so the government manages the operations while the capitalists siphon off profits from particular aspects. The results in the health industry, for instance, are that the government runs hospitals at taxpayers’ expense while private capitalists build the buildings and fancy equipment regardless of the needs of society. They are guaranteed a sale to the government and thus guaranteed a profit.

The government also helps private capitalists in those sectors by giving them an open-ended insurance policy like Blue Cross /Blue Shield and other “non-profit” corporations. The cost of health insurance has doubled every two or three years. Every time a worker or poor patient has to be admitted to a hospital but cannot afford it, the government pays, through Medicaid or Medicare. But the key is that capitalists sitting on those boards (like HHC or Blue Cross) make sure those insurance policies are open-ended so they can pass on all costs. The government picks up every hike and passes it to the taxpayers.

Thus the government uses public, or “non-profit”, or semi-public/semi-private sectors, to ensure and promote the interests of the private capitalists. In spite of an appearance of public ownership such as the TVA, HHC, post office or railroads, in essence this arrangement protects and promotes the interests of the capitalists. It is just a higher form and more sophisticated way to promote their interests. That is also the essence of Kennedy’s National Health Insurance Plan.

Programs like Social Security, groupings like the HHC, and countries like Sweden and Britain are in no way socialist because in the end the workers pay for it all, and the capitalists profit. The profits are easier for the capitalists because guarantees by the state lessen the sharp competition among them. State monopoly capitalism does not resolve the contradiction between the private ownership of the means of production and socialized production; it aggravates the contradiction by postponing the crises and deceives the masses about the “benevolence” of the government.

In short, state monopoly capitalism performs three functions in the economy. The first function is the state’s general role in early capitalism, that is tax the people to maintain the state apparatus, including the bureaucracy, jails, courts and military. The two additional functions are: stimulate the economy and become an independent large monopoly itself; and play a more “regulatory” role to serve the interest of the bourgeoisie and minimize the friction among them. As capitalism differentiates to the higher state of imperialism, and society’s productive forces develop to new heights, the contradictions among the different sectors of the economy, within each sector and within each industry, all become sharper and more complex.

War-time Economy’s Limitations

The nationalization and centralization of Hitler Germany’s economy may seem similar to the situation in the Soviet Union. But that state of extreme convulsion, fascism, is the extreme condition of capitalism. Either the capitalists made it through expansion or they would break. Hitler Germany was not a normal self-sustaining society and could not last long. The German economy under Hitler was a war-time economy.

In the space of six years in preparing for war (1933-1939), military spending in Germany rose to 90 million Reichsmarks, which was 60% of the total state budget in the same period and one-quarter of total national income. To pay for this, in part the fascist state allowed inflation to soar, the mass of money in circulation increasing more than three times in the period. To totally produce for war, the uneven development of the various industrial sectors was accentuated. From 1933 to 1939, production of consumer goods fell 43%. Meanwhile, production of the means of production increased 310% and armaments increased 1,350%.

The Soviet Union today can in no way be compared to the fascist economy under Hitler. While the Soviet Union does spend around 10-12% of its gross national product in the military (according to U.S. government estimates), it is far from a war-time economy. Under Hitler, armaments spending represented an increasing part of the economy, with leaps in spending year after year. Under the Soviet Union, defense spending is a constant proportion under the state plan and has been for over a decade. Moreover, unlike under the German fascists, the standard of living of the masses is not dropping drastically, but overall increasing which reflects the increasing amounts being devoted to production of consumer goods. The Soviet economy today is not a war-time economy run by decree. It does not revolve around the military.

Under Germany’s war-time economy, there were no trade union rights. Workers had no right to stage work stoppages, to strike or even to dissent. Discipline was enforced like they were army troops. In this regard, an early debate between Stalin and Lenin on one side and Trotsky on the other was over trade union freedom under the New Economic Policy. Lenin and Stalin advocated shifting the trade unions from war-time communism simply because orders and directives were no longer effective. A war-time economy cannot be sustained over a long period. Hitler succeeded for a while using chauvinism and the Alsace-Lorraine concession to deceive workers into thinking his was the only way to national salvation. He was thus able to streamline the economy. But once his foreign ventures failed, hardship set in. All the false ideological promises evaporated rapidly. Over a period of time, five to ten years at most, a war-time economy will disintegrate.

In the Soviet Union today, there is no martial law and workers are not disciplined like an army. Scientists and cultural workers have contacts and exchanges with their colleagues worldwide, and air their criticisms openly. For example, in the June 1980 issue of Socialism: Theory and Practice (a Soviet monthly digest), an article describes an open debate which took place in the Soviet weekly, “Literaturnaya gazeta.” Initiated by a civil engineer over criticizing weaknesses in construction work, the debate broadened to why it is important for Soviet citizens to openly criticize socialist shortcomings.[9]

The same goes for China. Although the Chinese reacted to the masses’ airing their views by abolishing wall posters and putting a lid on the “great debate,” overall the atmosphere is now more democratic. All sorts of views, including reactionary ones, are being raised. There is more honesty and less up-tightness in recent Beijing Review’s. This is conducive to invigorating line struggles and to the flourishing of proletarian culture, science and technology. That is not to say there is no rightist, revisionist trend among officials, who are not financing and supporting socialist new things. This failure is part of not waging concentric attack.

In short, a war-time economy cannot last for more than a few years and is very restrictive. Carried out for a long period (according to the RCP, over 30 years in the Soviet Union), there could not have been the steady growth in the masses’ standard of living evident in the Soviet economy nor could a democratic atmosphere exist.

Socialist Planning and Industrial Society

It would be metaphysically one-sided to say that planning defines socialism, or that socialism is where labor power is no longer a commodity. In primitive economies, e.g., slavocracy, there could be planning in one locality. But that does not make it socialist. Also, under those conditions labor power was not a commodity because it could not be bought and sold at will. I think the correct way to understand the difference between socialism and capitalism is: one, to view it from a historical developmental point of view; and two, to see whether the basic contradiction of capitalism is being resolved, that is, the contradiction between the private ownership of the means of production and socialized production.

We have to qualify the meaning of planning and put it in the context of industrial society. In a primitive economy, a subsistence economy in ancient times, there were mainly local economies. For example, it was possible for the slaveowners under slavocracy or the feudal principalities under feudalism to plan and to integrate, because it was within their power. Power was centralized and within each locality, no contradiction existed like those among capitalists in competition with one another. Within each locality it was possible to plan. But that cannot define socialism, because a socialist economy is a modern economy.

In this modern economy, private ownership of the means of production (individual ownership of one or two sectors of the economy or the companies producing a particular product) will contradict the complex and highly interwoven character of the economy as a whole. The more modern and advanced the society, the more severely private ownership of the means of production comes into conflict with development of the productive forces and with the nature of society itself, and eventually reaches the point where today, capitalism is stagnating and moving backwards. We see in the United States the glaring contradiction between the productivity of the society and the impoverishment of the proletariat, between the rich few and the impoverished masses.

Highly developed socialism is necessarily an industrial economy and modern productive society, because as a whole it is the alternative, the inevitable outgrowth of capitalism which has brought about the highest development of productive forces to date. Socialism has to be an industrial society with a planned economy to resolve capitalism’s sharp contradiction between socialized production, a necessity under capitalism and in modern industrial society, and the private ownership of the means of production. It will be the future system, just as capitalism was the inevitable alternative to feudalism, and feudalism the inevitable alternative to slavocracy, which in its turn was the inevitable alternative to primitive communalism.


[1] See On Khrushchov’s Phoney Communism and Its Historical Lesson For the World (Peking: Foreign Languages Press, 1964), p. 65.

[2] V.I. Lenin, “Eighth Congress of the R.C.P. (B.), March 18-22, 1919,” Lenin Collected Works, Vol. 29 (Moscow: Progress Publishers, 1974).

[3] Frederick Engels, “Morality and Law. Freedom and Necessity,” Anti-Duhring (New York: International Publishers, 1972).

[4] Fundamentals of Political Economy (New York: M.E. Sharpe, Inc. 1977).

[5] Chang Chun-chiao, On Exercising All-Round Dictatorship Over the Bourgeoisie (Peking: Foreign Language Press, 1975).

[6] Karl Marx, Capital, Vol. 1 (New York: International Publishers, 1974), pp.592-594.’

[7] Yao Wen-yuan, On the Social Basis of the Lin Piao Anti-Party Clique (Peking: Foreign Languages Press, 1975).

[8] Martin Nicolaus, The Restoration of Capitalism In the U.S.S.R. (Chicago: Liberator Press, 1975).

[9] Socialism: Theory and Practice (Moscow: Novosti Press Agency, June 1980).