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

2. The Question of “Labor Power as A Commodity” In Relation to Socialism

There have been some attempts to prove that capitalism does not exist in the Soviet Union using “labor power is not a commodity” as the sole criterion. Theoretically, “cell” by “cell,” socialism is indeed a society where labor power is no longer a commodity. But this approach is still pedagogic. It is abstracted from the concrete conditions of real socialism and the real problems of winning power in economically underdeveloped countries. The questions instead should be: What are the obstacles to planned economies there, and why is there still private and mixed ownership of the means of production there?

Nevertheless, we must show why to define socialism in this manner (in terms of labor power not being a commodity) is incorrect. The first problem of the view that “labor power is not a commodity” alone or principally can define socialism is that while it may be true of socialist society, it is not a characteristic of socialism alone. Just as we have to qualify the meaning of overall planning to put it in the context of a modern industrial society–capitalism, socialism, or communism–we also have to put labor power being a commodity in the context of modern society. Under primitive communalism, slavocracy, or feudalism, one reason why economies can be planned is they are local and relatively simple. Very little interdependence exists because the economy is primitive and division of labor very simple. At that level of productive forces, very vigorous, organized, disciplined, and highly productive labor is not necessary, because society thrives on a lower energy level, on a less organized level, on a more spontaneous level, on a subsistence level. But in those societies, labor power is not a commodity either, because labor was physically owned in a slavocracy or feudal principality by the master, feudal lord, or head of the church. The masses did not even have “bodily freedom,” the freedom to go where they wanted, to decide where they wanted to work, or what they wanted to work in. In other words, they could not sell their labor power to different companies, like auto, electronics, etc. That was a condition of feudalism.

Capitalism is a more vigorous, organized productive society. One condition for its birth was that labor had to be freed from bodily ownership by the feudal lords, from bondage to the land, creating a sufficient amount of “free labor” for the capitalists to concentrate through purchasing labor power. This labor is not bound to the land, and can be concentrated in assembly lines to develop the higher level of productive forces under capitalism as compared to feudalism. The capitalists’ ability to purchase and to sell labor power at will is a characteristic of capitalism.

The original role of money, before the development of capitalism, was to serve as a medium, a standard that made easier the exchange of one commodity for another. But under capitalism, this medium of exchange has taken off with a life of its own. For the capitalist, the aim of production is not to produce goods to exchange and to use, but instead it is a compulsory drive to accumulate capital through exploitation–simply put, to make more money.

Once money becomes the aim of production, labor power has to become a commodity. In other words, a worker’s labor power can be bought and sold. Besides the fact that people must be legally free–that is, not slaves owned by others or serfs tied to the land–the laborer must have lost all means of production and thus all ability to produce either for consumption or exchange for himself. An example of this is peasants being driven off the land. Labor power as a commodity is the necessary complement of the private ownership of the means of production by the capitalists.

Only by buying the worker’s labor power can the capitalist make profits. Workers produce more than what the capitalist pays them in wages and benefits. This is the basis of exploitation of the workers. What the workers produce over and beyond the socially necessary labor for keeping themselves and their families alive and working is surplus value. Surplus value is the only source of profits and is ripped off by the capitalists.

While under socialism labor power is no longer a commodity, we are not thus equating it to labor power in the landbound, bodily-restricted conditions of the past. The context is modern society, a complex, highly productive and healthy society compared to the past periods. And in a socialist society not only do you no longer sell your labor power to the capitalists, but high consciousness is required for you to be concerned about the overall production and be one of the masters of your own country. You are no longer the exploited class, but the ones who run the country. The difficulty will be a democracy on a far greater scale with far more people participating than ever before. It will be the first time the vast majority become the rulers rather than the ruled. That’s why socialist revolution has to be so thoroughgoing, so far-reaching, and is so difficult.

Marx said, “Yet we know by experience that a circulation of commodities relatively primitive, suffices for the production of all these forms (such as the forms of slavery and feudalism –ed.). Otherwise with capital. The historical conditions of its existence are by no means given with the mere circulation of money and commodities. It can spring into life, only when the owner of the means of production and subsistence meets in the market with the free laborer selling his labor power.”[1]

We quote this passage from Marx because it shows that for capitalism to exist, there must be both labor power as a commodity and the private ownership of the means of production. From this view, it is metaphysically one-sided to call labor power being a commodity the sole definition of capitalism. For instance, the conditions for labor power being a commodity can exist without capital’s existence. One example is the period of vagabondage in England–a period of centuries–after the peasants were driven off the land by the Enclosure movement. There free laborers were not restricted to the land and were stripped of all means of production. But as Marx said, only when they met in the market with the owners of the means of production did capital come into being. Thus, to prove the existence of capitalism, it is necessary to show both l) the private ownership of the means of production in the form of capital and 2) free labor selling labor power.

Those who take the one-sided view that labor power is not a commodity alone shows that capitalism does not exist in the Soviet Union inevitably fail to take on the strongest and most developed argument of those leading representatives of the line that the Soviet Union has restored capitalism. This is specifically the argument of Chang Chun-chiao, that the ownership system has changed back to the capitalist mode. This leaves the strongest argument presented by Chang unanswered and fundamentally weakens the validity of many positions on this crucial question.

It is extremely difficult to prove that labor power is not a commodity in the Soviet Union and China without looking at the system of ownership. First of all, labor power in the socialist spheres of socialist countries possesses many of the commodity characteristics of labor power under capitalism. Workers in socialist countries are free laborers and as such are the same as workers under capitalism compared to feudalism and slavery. There is a market-like relationship between the worker looking for work and the factory hiring the worker. There still appears to be a buyer of labor power and a seller of labor power. There still is remuneration by the wage under socialism. There still cannot be the immediate appropriation of all the value created by the worker as an individual. There still appears to be use value and exchange value in relation to labor power.

And concretely, due to the fact that the whole economy is not state-owned, the buying and selling of labor power does exist in some instances in China’s economy as a secondary and declining aspect. For instance, when an affluent commune hires members of a poorer commune to work their land but only pays them a fixed wage, surplus value is extracted to benefit the members of the affluent commune. As societies making the transition from capitalism to communism, socialist countries, especially underdeveloped ones, inevitably maintain certain aspects of capitalism. Only with the development of the productive forces and expansion of the state-owned sectors can these remnants be eliminated step-by-step.

The key question then becomes: If there seem to be markets for labor power in socialist countries, what is the essence of these markets? The key is: Who is buying? If the economy is ruled by capital, then it is the capitalist buying labor power in order to exploit the workers. If, however, the means of production is owned by the state representing the interests of the working class, the workers are not selling labor power to the capitalists but essentially hiring themselves, and labor power is not a commodity. That is the criterion which defines labor power not being a commodity under socialism. This is why the overall character of the system of ownership is key. Labor power being a commodity depends on the private ownership of the means of production in the form of capital and depends on capital’s existence.

Finally, the destructive effects of capitalism on the workers and the laws of motion of the capitalist system cannot be derived from the fact that labor power is a commodity under capitalism. Labor power being a commodity only tells you that free laborers are selling labor power in a market. You cannot derive the effects of capitalism such as the impoverishment of the proletariat in the form of a reserve army of labor, the worsening living and working conditions, etc., from the premise that labor power is a commodity. Only the existence of capital and the laws of its development can show these.

Capitalist Accumulation Produces Masses’ Impoverishment

The character of capital determines that the very process of capital accumulation by the capitalists leads to widespread joblessness, as both the absolute and relative impoverishment of the proletariat increase.

National income figures show the relative impoverishment of U.S. workers. National income is the sum total of newly-created value of the whole society in one year. In capitalist society, national income is first divided into the part that goes to the workers’ wages and the part of the workers’ labor plundered by the capitalists as surplus value, the source of all profit under capitalism.

Although national income is wholly created by the workers and increases steadily in the process of expanded capitalist reproduction, under capitalism the share of wages received by the workers steadily declines and the share of surplus value ripped off by the bourgeoisie steadily increases. This is called the relative impoverishment of the proletariat. From U.S. government figures, the share of American workers’ wages in the national income was 45.6% in 1843, 43.5% in 1866, 42.7% in 1891, 37% in 1938, 33.3% in 1945, and 29.7% in 1956.[2] Even though the workers’ standard of living may have risen, the capitalists were taking ever-bigger chunks of the pie, leaving workers to divide an ever-shrinking percentage.

In capitalist society, not only is there the relative impoverishment of the proletariat, there is absolute impoverishment as well. This absolute impoverishment includes: l) the existence of a large number of unemployed workers; 2) the decline in real wages through inflation and taxes; 3) massive personal debt; 4) poor living conditions; and 5) excessive labor intensity and poor working conditions.

The creation of the relative surplus population–people who are either periodically or permanently expelled from the production process by the workings of the capitalist system–represents one form of absolute impoverishment under capitalism. Basically, as the capitalist system develops, it produces an industrial reserve army of the unemployed, a permanent and necessary feature of capitalist production.

One reason is the expulsion of people by machines under capitalism, in Marx’s terms, the increasing organic composition of capital. Driven by competition and greed for capital accumulation, the capitalist tries as much as possible to replace people with machines, like the replacement of hot-lead typositors by computerized typesetters. With the improvement of technology and the increase in the organic composition of capital, employment opportunities for the workers are correspondingly reduced and unemployment increased.

On the one hand, the demand for labor power is reduced relatively. On the other hand, the supply of labor power increases absolutely, with the necessity for women to join the workforce, the increase in population as a whole, the bankruptcy of the petty bourgeoisie forcing them to become workers and the migration from the farms to the cities. In the end, capitalism always breeds a large number of jobless, resulting in a relative surplus population, relative in the sense that the “surplus” is only in relation to capital’s demand for it. This is caused by capitalism whereas under a socialist system those who need to eat can also be employed to produce.

Relative surplus population is created by capitalist accumulation. At the same time it becomes the level of capital accumulation. The existence and development of the capitalist mode of production demands that the unemployed exist. The capitalist uses the existence of the unemployed workers to threaten the workers inside the plant and to depress their wages, pitting worker against worker, employed against jobless.

At the same time, because capitalism develops amidst competition and chaos, it is characterized by sudden contractions and expansions–the periodic crisis of overproduction. When production suddenly expands, the capitalist’s demand for labor cannot be met by the natural increase of labor power. The capitalist needs a labor power reservoir. Relative surplus population provides such a reservoir. In this sense, we call the huge army of unemployed in capitalist countries an industrial reserve army. Of course, on the other hand, when the economy goes into a crisis, the commodity of labor power cannot be sold and the worker is thrown out into the street.

In both the Soviet Union and China, the right to a job is guaranteed by law. Even bourgeois scholars admit that widespread hiring and firing of workers and built-in unemployment due to the periodic crisis of overproduction do not exist in either country. The Soviet Union is now facing a labor shortage, as William G. Hyland admitted in his article, “Brezhnev and Beyond.”[3] It would be very hard to support the thesis that there is a capitalist industrial reserve army or a capitalist market for labor in either country.

This is not to deny that both the Soviet Union and China do have problems finding jobs for everyone immediately. Both countries are wrestling with the problem of those people coming into the cities from the countryside in search of a better standard of living. Because of the lack of development of the productive forces and the uneven development of the cities and countryside, and among regions, there are not yet enough urban industrial jobs for everyone who wants one. But this situation has to be contrasted to the law of capitalist accumulation whereby the development of the economy necessarily means fewer and fewer opportunities for employment and unemployment is built right into the system.

The CPCs arguments of the early 70’s are far from convincing on the question of the Soviet Union turning labor power into a commodity. Using the method of taking isolated facts and generalizing to the whole economy, the CPC’s own articles show the opposite. For instance, in an article appearing in Peking Review (September 27, 1974) titled “Serious Fluidity of Manpower in Soviet Union,” they try to make the case that “floating workers” (those leaving one job for another) mean labor power has become a commodity. They say that according to the Soviet magazine Smena the annual number of floating workers in the Soviet manufacturing and building industries in the last few years reached 10 million. But they then go on to say that on the average a laborer misses only 23 days of work during the float period. Hardly an argument for the existence of an industrial reserve army! In the United States, in the first quarter of 1976, the average duration of unemployment was 17 weeks.[4]

Impoverishment in the Soviet Union and China?

It would fly in the face of reality to say that there is absolute or relative impoverishment in either country. There is no evidence of a steadily declining share for the proletariat of the national income or steady deterioration of working and living conditions in the forms of a large number of unemployed, a decline in real wages, poorer housing conditions, environmental hazards and excessive labor intensity.

For all workers, a major and immediate difference between socialism and capitalism is the advance from capitalism’s systematic impoverishment of the proletariat. That is not to say, however, that there may not be periods under socialism when the masses face temporary lowering of their living standards. Dislocations due to incorrect plans, organizational problems, natural calamities, or combinations of these can lead (as they have in Poland) to shortages, price increases, declining rates of production or other hardships for the masses. But just as temporary prosperity under capitalism does not reverse the systematic impoverishment of the proletariat, temporary lowering of the standard of living for the masses in socialist countries do not mean socialism impoverishes the proletariat. The historical and crucial difference is that the socialist system is not driven by blind laws outside human control, and the proletariat can and does learn from its shortcomings and mistakes and over a period of time corrects them. The capitalist system, on the other hand, is driven blindly by its laws to constantly reproduce and repeat its inherent cyclical crises and to continue its steady impoverishment of the proletariat.

The impoverishment of the proletariat must be viewed historically. For example, we cannot compare the socialist productive forces of the Soviet Union and China today with those of the United States because the latter was already a leading industrial power by 1900. And this was accomplished through slavery, coolie and child labor as well as colonial plunder. In 1917, the Soviet Union had an economic base comparable to Spain’s. In 1949 China’s was comparable to India’s. Only from such concrete historical comparisons can we see the superiority of socialism. Moreover, we must look at the impoverishment of the proletariat not on the basis of an individual factory, a specific period, or one location, but over decades, as a trend. It must be judged according to the living conditions of the employed, unemployed and semi-employed, as well as the relations between exploiting nations and exploited nations, colonies and dependent countries. From this historical materialist view-Point it is clear that the people in the Soviet Union and China are not being impoverished. The food consumption in China is far better than in India, although in 1949, China started at a lower level. The Soviet people’s meat consumption already surpasses that of all European peoples, including Germany. With the same method and viewpoint, we can see the impoverishment of the Proletariat in the United States and people in all imperialist countries.

Shortages of Consumer Goods

Shortages in socialist countries are not primarily caused by mismanagement or incorrect planning. Some shortages are aggravated by incorrect planning and the incorrect lines guiding it. But the inherited historical conditions are such that shortages are inevitable, because those socialist countries started out as poor countries. Comparing Russia to Spain, or China to India, the superiority of the socialist system can be seen and appreciated–how much progress they’ve made and how many fundamental problems have been solved in overcoming concrete conditions.

Despite shortages, there is no starvation in the Soviet Union or China. In agrarian poor countries, starvation is almost the norm, but in socialist agrarian countries, it is now unusual. It happened in the Soviet Union only during war-time (right after 1917) when the economy was greatly dislocated, and in China during the Great Leap Forward, when there were drastic dislocations due to exaggeration and unrealistic planning. Those were the exceptions. Overall, the socialist countries have solved a problem widespread in countries of similar economic development. From a historical point of view, the system has changed the circumstances, which is powerful testimony to the superiority of socialism as a social system.

Many people have pointed out the long lines of Soviet and Chinese people waiting to get meat or rare consumer items. It is true the shortages exist. But examine the statistics. The average meat consumption, the per capita caloric intake of the Soviet people, is equal to that in the United States, so the rate of improvement has been much better than the United States. In fact, the meat consumption, the caloric intake per capita in the United States is decreasing because of impoverishment. In Russia the rate has rapidly increased. The Russian people’s diet is much better than the German or the French today. That’s a miraculous achievement and a sure sign of the superiority of socialism. Remember that both Germany and France were far more industrially developed than the Soviet Union in 1917.

This parallels China’s development in relation to India. The shortages in consumer items must be viewed in relation to the productive sector. Productive industries like steel, aircraft, railroad, and machine-tool are decaying, going backward, in capitalist countries. In contrast, productive industries in the Soviet Union and China are steadily developing. Our understanding is that there was a one-sided stress on the capital goods or producer goods sector in the Soviet Union (and in early China modelling itself after the Soviet Union), and neglect of the consumer items, which in the long run slowed down the development of productive forces. In the main, shortages in consumer items are due to heavy investment in the long-term productive sector.

People first of all have to eat. They also need education and relaxation to be most effective in making contributions to socialism, and in the course of that, raise their socialist consciousness. An atmosphere of austerity, frugality, war-time economy, and shortages, detracts people from giving their all. An incorrect proportion between productive and consumption sectors actually slows down production long-term. That problem is now being corrected in China. Actually Mao had solved the problem after the 50ís disasters when China followed the model of the Soviet Union. He laid out the line about agriculture being the foundation. Now the Chinese always proceed from that: solve the agricultural problem, and at the same time deal with industrial growth. As a result, they became the first third world country self-sufficient in grain. The problem of feeding the population of a vast country being solved, construction is not a problem because basic items do not have to be imported at tremendous expense. Steady step-by-step growth in the industrial sector will all be net growth. There will be no breakdowns due to the shortage problems–when the state must use up all the foreign exchange gained from the industrial production to buy foodstuff. A country with a weak foundation will not be able to “walk on two legs.” Historical experience merits attention. A major reason why the United States is the most rapidly developed capitalist country in the world is because of its developed agriculture.

Historically, there is a mechanical approach to the development of socialist society. The war-time Soviet model was to build heavy industries first, rather than to proceed from concrete conditions. The Soviet Union has never really solved the agriculture problems since 1917. The agriculture and the peasantry were sacrificed due to incorrect line. Always developing heavy steel and machine-tool industries first does not reflect correct priorities. Though it is moving in the correct direction, it does not start from the concrete conditions.

Similarly for our Party, we said we should have a national plan–based on the existing strengths of the Party and of the comrades–not proceeding from our weaknesses or our needs. We have to develop new strength based on our existing strength, and not the other way around.

The main problem with consumer items in this country is not lack of supply but rather the workers’ lack of purchasing power. Abundance and variety are meaningless if the masses are too impoverished to buy the goods. That is a classical problem of the crisis of relative overproduction in capitalist economy which leads to periodic and heavy destruction of productive forces. It does not happen in socialist countries because there is no crisis of overproduction. Everything produced–machines in the productive sector which multiply the development of society, and items in the consumption sector–is overwhelmingly put to good use for the growth of society because there are no crises of overproduction due to impoverishment of the proletariat. There is none of the periodic destruction–recession, plants idled, workers unemployed–inherent in capitalism.

No Impoverishment in the Soviet Union

Perhaps the most convincing case that there is no impoverishment of the proletariat in the Soviet Union, can be made by quoting the U.S. government. According to one study, the average growth in real disposable income in the 1950s was 8.9% per year; it was 5.7% in 1961-65 and 6.7% between 1965 and 1970. Moreover, unlike the inflation-plagued western capitalist countries, prices in the Soviet Union since 1955 have averaged 77% of those in 1950.[5]

Another government study stated: “Under Brezhnev’s leadership, the average level of living in the U.S.S.R. has risen yearly by amounts that most Westerners would consider exceptional. Diets have improved–more meat and other quality food and fewer starches are on the nation’s tables. Consumer durables are found in more homes and are available in stores. Russian dress has improved, and the contrast with foreign clothing is more discernible. Still, the consumer’s situation is a mixture of pluses and minuses. On the negative side, incomes have continued to rise faster than the supply of goods and services, perhaps forcing individuals to postpone purchases. Despite marked improvements in the levels of living in the mid-1960s, the gap between the U.S.S.R. and the West–or even the Bloc’s countries–remains large.”[6]

The accompanying tables show clearly the quantum leaps in the quality of diet of the Soviet masses made since the October Revolution. They show something even more revealing in these times, the steady trend of decreasing prices for consumer goods in the Soviet Union, in stark contrast to the United States and Britain. Though prices calculated in work-time are higher in the Soviet Union overall, given its lower level of development of he productive forces, in almost every category–food, gasoline, cars included–prices are going down in the Soviet Union and rising in the West.

Some other Soviet statistics show they are rapidly catching up with the West in terms of consumer durables. For instance, in 1975, 85 out of 100 Soviet families had radios, 72 out of 100 had TV sets, 64 of 100 had refrigerators and 72 of 100 had washing machines.

Moreover, the Soviet Union today has one of the highest percentages of the population enrolled in educational institutions, the lowest student/teacher ratios and by far the most doctors and hospital beds per 10,000 population. The scale of housing construction remains unequaled anywhere in the world; in the Tenth Five-Year Plan period (1975-1980), one in every five Soviet citizens will move to new or improved housing. Real per capita income is planned to increase by 21%; allocations out of the social consumption funds by 30%; and services to the population by almost 50%. The number of children in schools and daycare centers is planned to rise by 43.8%. The plan provides for significant increases in the number and range of educational opportunities, especially for the adult population, and including an increase in secondary vocational-technical schools of 81.4%.[7]

It is interesting to look at the Soviet Union’s handling of occupational health and safety, especially given the deteriorating conditions in the United States. A U.S. physician visiting the Soviet Union, for example, found that the Metallurgical Workers Union have a labor medicine program on coke ovens in the steel industry, which are cancer-causing and otherwise dangerous. They worked with the Health Ministry and the Steel Ministry and succeeded in greatly reducing hazards through development of the “dry quenching” process. Their methods are known but considered too extravagant in the United States, although European and Japanese workers won the Soviet system of coke oven protection for their mills.

It is also instructive to compare the “maximum safe airborne concentrations of substances,” called TLV’s (threshold limit values) in the United States and the comparable figures in the U.S.S.R., called MAC (maximum allowable concentrations). TLV’s do not protect workers with increased susceptibility, but are meant as an average safe value. On the other hand, MAC’s are set at a value which will protect every worker from any deviation from normal. Any exposure that might cause any change is forbidden. In fact, in the U.S.S.R., MAC’s are only temporary because the optimum value is considered to be zero.


A few examples: TLV’s (U.S.) for ammonia, carbon monoxide and sulfur dioxides are, respectively, 35, 55 and 13 mg. per cubic meter. The MAC’s (U.S.S.R.) for the same are, 0.2, 3, and 0.5. These comparisons are not specially selected. They explain why work is so much safer in the U.S.S.R.[8]

All of this is taking place in what is, historically, one of the fastest growing economies in the world. According to Soviet sources, annual growth rates in Soviet industry have averaged about 10% since the October Revolution in 1917. The figure for the United States is less than 4%. The gap between the two countries in the level of national income, in the output of industrial goods and in many other indices has been constantly narrowing.

Of course, in comparing the two countries, we should always bear in mind the situation of both countries in those early years. In 1921, after the end of the Civil War and the foreign military invasion, the U.S.S.R. production was less than 2% of U.S. industrial output. Not only did the Soviet Union lose 20 million people in the Anti-Fascist War, but over a third of its national wealth was destroyed. In 1920 the U.S.S.R.’s portion of the world industrial output was 1%. Yet today the U.S.S.R. accounts for almost a fifth. In 1970, industrial output of the U.S.S.R. was more than 75% of the United States. The advantages of socialism, which for the first time ever provided a system of planned economy, combined to secure for the U.S.S.R. stable and far higher rates of economic growth than in the United States. This enabled the Soviet Union to eliminate its economic backwardness in a relatively short period of time.

In 1970 the U.S.S.R. production exceeded the U.S. level of a wide variety of products including coal, peat, coke, iron ore, manganese and chrome ores, pig iron, steel tubes and pipes, electric and diesel locomotives, passenger coaches, tractors, grain combine harvesters and cotton picking combines, hydraulic turbines, asbestos, cement, sawn timber, sheet glass, cotton and woolen textiles, leather footwear, sugar, animal fats, commercial timber and fish. The gap between the Soviet Union and the United States in a number of other industrial products, including those of the more advanced industries such as petroleum and steel, has narrowed greatly.[9]

In 1970 Soviet investments were on a level with the United States although as recently as 1950 they were only 30% and in 1965 90% of the U.S. level. Moreover, in the last decade, the Soviet Union has outspent the United States in research and development by $100 billion.[10]

On the subject of living standards, it is interesting to see what the Soviet Union plans in the next five years, especially given the wide-ranging and vicious cuts in the United States government budget in every area of people’s welfare.

As the American people are being forced to cut back, the Soviet Union is planning a big increase in the production of consumption items. According to the Eleventh Five-Year-Plan, while the planned increased output of industrial producer’s goods is staying relatively stable in comparison to the 1976-1980 plan at 26-28%, the planned increase in consumer goods is rising sharply from 21% in the last plan to 27-29% in the current plan.

Here, I should let the Soviets speak for themselves. A. N. Tikhonov presented the “Guidelines for the Economic and Social Development of the U.S.S.R. for 1981-1985 and for the Period Ending in 1990” to the CPSU’s 26th Congress this year:

The proportion of the consumption fund in the national income is to be increased. Real per capita income will rise by 16-18%.

In raising the people’s living standards, one of the key measures will be to ensure the fuller satisfaction of the consumer demand for various goods and services. The trade turnover of the distributive network of the state and the cooperatives will increase by 22-25%.

A food program and a program for the development of consumer goods production are being drawn up and will be implemented. This will help to increase the supply of meat, fruit, and other products to the population. Larger quantities of various kinds of cotton, woolen, silk and flax fabrics and articles made of them, underwear and garments, goods for children, recreational and household goods, and other articles of everyday use will go on sale. It is planned to extend and renew the range of consumer goods, improve their quality, and increase the sale of new, fashionable as well as inexpensive good-quality products. Moreover, the policy of ensuring the stability of state retail prices on basic foods as well as non-food products is to be pursued consistently. A lot remains to be done to develop and improve the work of the distributive, public catering, and every services industries, in fact, the entire services industry: Consumer demand must be constantly studied, and satisfied to the largest possible extent.

The cash incomes of the population will continue to grow. Average wages and salaries are to rise by 13-16%. The size of wages and salaries must be more strictly tied into the end results of the work of the collectives as well as of each individual. With the creation of the right conditions and the proper accumulation of resources, there is to be a gradual rise in the minimum monthly wage to 80 rubles, as well as in other wages and salaries, mainly in the production branches of the national economy.

Various other centralized measures are envisaged: regional increments to wages and salaries in the Urals and in some areas of Kazakhstan for certain categories of factory and office workers for whom such increments have not yet been established; long-service increments in the southern areas of the Soviet Far East and Eastern Siberia; larger increments for night work in some industries.

In 1985 the wage rises are to amount to roughly 10 billion rubles.

Collective farmers’ incomes are to grow by 20-22%. Taking into account the income from personal subsidiary holdings, this will bring them closer to the incomes of factory and office workers.

As you all know, many measures of great practical significance to each Soviet family are financed by our state through the social consumption funds. In 1985 these funds will amount to 138 billion rubles, or to an average of 2,000 rubles per family of four.

As stated in the Report, the Party’s Central Committee and the Government have worked out, and consider it expedient to put into effect in the next five and the subsequent period, a new and wide-ranging set of measures to improve the daily life of mothers and of the rising generation and, for these purposes, to increase state allowances to families with children as well as to newly weds. These measures provide for increasing the incomes of families with children, improving housing, particularly among young families, further enlarging the network of children’s preschool institutions so that every family might be able to use their services, ensuring shorter working hours for mothers and creating better conditions for the rearing of children.

In the first stage, more than 9 billion rubles is to be allocated to implement the measures aimed at providing more state allowances to families with children: the measures will be put into effect gradually, by regions. These funds are to be used to introduce, in 1981-83, partially paid leave for mothers for the care of a baby until it reaches the age of one year. Eventually, such leave is to be extended to one and a half years.

It is planned to introduce state allowances of 50 rubles at the birth of a couple’s first child and 100 rubles each at the birth of the second and third child, and also to extend by three days the annual leave for working women who have two or more children under the age of 12. In 1981 there is to be an increase in the monthly allowance to unmarried mothers with children.

Mother-and-child care in our country is a matter of state importance. The new decision of the CPSU Central Committee and the Council of Ministers of the U.S.S.R. serves as further convincing evidence that our Party and our Government are steadfastly carrying out Lenin’s behest that the best should be given to children.

In the next five years there are to be improvements in the living conditions of labor veterans who are retired on pension, an increase in the minimum old-age and disability pensions for factory and office workers as well as collective farmers, loss-of-breadwinner pensions, and various pensions granted earlier. New measures are to be implemented to improve the material and living conditions of veterans of the Great Patriotic War.

Within the next five years, the Government is to allocate an additional sum of nearly 6 million rubles for pension increases ...

As in previous years, housing construction is to proceed on a larger scale in the next five years. During that time it is planned to build 530 million to 540 million square meters of housing...

In speaking of the program of social development for the coming years, it must be emphasized that this program attaches special significance to improving working conditions, and to doing everything possible to reduce manual unskilled, and arduous labor, as well as providing better conditions for it. Attainment of the planned level of mechanization of transport, loading, unloading and storage will make it possible to save the labor of between 1.5 million and 2 million people in 1985.

Work is the main sphere of people’s activity and it is important to continue enriching its content and making it more creative.[11]

In the midst of U.S. capitalism’s worst economic crisis ever, the difference between the American people’s deepening impoverishment and the Soviet people’s continuing enrichment becomes clearer. Socialism is indeed the wave of the future.

Economic Growth in China

The most rapid improvement in the standard of living of the Chinese people occurred at the end of the First Five Year Plan.

The decade of 1949 to 1959 was a decade of astronomical improvement, showing the sharp contrast between what socialism can do and what semi-colonialism and semi-feudalism did to China. Compared to 1950, the volume of retail commodities on the market increased 2.2 times. Grain increased 62%, domestic vegetable oil 97%, salt 94%, sugar 300%, sea products 240% and cloth 120%.

During this decade there were no price increases though the wages of workers had more than doubled and the income of peasants increased almost 100%. Workers receiving insurance increased from 600,000 in 1949 to over 13 million in 1958. In the communes most people without productive ability received free grain provisions. Employment in enterprises and government institutions increased 4.7 times and in industries 7.5 times.

In education, students in schools of higher learning increased from 110,700 in 1949 to 660,000 in 1958. In middle vocational schools, the increase was from 220,900 to 1.47 million, an increase of 5.4 times. Ordinary high schools increased their enrollment 7.2 times, while primary school students increased 2.5 times. Hospital beds increased more than four times and health care workers increased nearly two times.[12]

While tremendous improvements in the standard of living of the Chinese people were accomplished in the early stage of the development of socialist China, the leadership since the death of Mao has summed up that the standard of living has not substantially increased since the early stage and basically remained at the level of 1957.

The main reason, according to them, was an incorrect ratio between consumption and accumulation of economic output, and the imbalances in investments among different sectors of the economy. Too much was put into building up the infrastructure, the basis of long-term growth of the economy, and not enough to meeting the immediate consumption needs of the people. Though the standard of living has not drastically improved, neither has it deteriorated; the overall economy has grown rapidly. The lack of growth in consumption is not a result of the impoverishment of the proletariat as is the case in capitalist countries. It is rather the inevitable price a country has to pay to pull itself out of a backward economic state. That it is able to do so continuously, as compared with capitalist-dominated countries like India, is a testament to the superiority of socialism in underdeveloped countries.

According to a book by Xue Muqiao, China’s leading economist, the rate of accumulation during the First Five-Year-Plan was around 24 %, which is very high compared to capitalist countries. From 1958 to 1960, the annual rate of accumulation was between 30% and 40%. From 1966 to 1970, the years of the Cultural Revolution, it went down to around 20% and after 1970 returned to 30%.

According to Xue, too high a rate of accumulation cuts consumption by the masses and hurts their initiative to produce. Though it is incorrect to put an absolute number on the proper level of accumulation, it is a general law that the rate of accumulation and consumption has to be handled correctly. Ideological work has some influence one way or the other, but it cannot be relied upon solely or for too long a time. The standard of living of the people must also be raised.

A brief survey showing how the Chinese government distributed the state budget from 1952 to 1979 shows a trend of steady increase in capital construction, a decrease in the proportion going to national defense and administration, maintenance of a definite proportion for education and health, and some fluctuation in the “miscellaneous” categories. These figures explain why even though the average annual increase in the rate of gross domestic product was 6.2%, not much went to actual wage increases. Most of the surplus product was used to build up China’s economic base.[13]

There has been much debate recently among the Chinese leaders on how to improve the people’s standard of living. This debate has shaped up as the so-called “consumption trend” versus the “production trend.” The merits of the positions aside, concrete measures are being taken by the Chinese leaders to correct what they see as a one-sided emphasis on accumulation. For example, the financial allocation to agriculture (including the price subsidies on agricultural produce) in 1979-80 increased from 12% in the 70’s to 14.7%. The amount allocated for education and health was increased from the 10% ebb of the previous years to 13%. Though this is far from enough to drastically improve the people’s lives, it is nevertheless an increase based upon what China’s undeveloped economy can afford.

As part of this effort, China’s leaders estimated that in 1980, the average annual wages of the workers and staff in state-owned enterprises or units have risen by “...nearly 80 yuan compared with 1979. Nine million people in cities and towns were given employment in 1979 and another 7 million in 1980. The speed of urban housing construction was further accelerated. It is estimated over 78 million square meters of floor space was completed in 1980, an increase of no less than 15 million square meters over the previous year.” They go on to say that the “total amount of urban and rural purchasing power in 1980 registered an increase of more than 30,000 million yuan over 1979. The total volume of retail sales is estimated to have reached 207,100 million yuan, an increase of some 11% over the previous year even after price rises were taken into account.”[14]

Working Class’ Short- and Long-Term Interests

Socialism is not simply working class dictatorship; with workers m leadership. Workers may have the most genuine of intentions and the burning desire to fight for their class, and yet lack the know-how to lead a modern society, to organize and run the economy, and lack the ability to resolve contradictions among ne people and to promote mass democracy in an inherited historical situation. In economically backward countries like Russia and China, where the masses’ literacy level was low, where the level of knowledge and organization (what Lenin called the “cultural level”) was low, where the country had a very decentralized and semi-feudal economy, the problems were unavoidable. Unless the interwoven problems are tackled simultaneously, there will be breakdowns.

Lenin brought out the different aspects of these problems in the speeches given at the Eighth, Ninth, Tenth and Eleventh Congresses of the Russian Communist Party. Lenin emphatically stressed that the interests of the working class cannot be detached from the knowledge gained by the bourgeoisie and the petty bourgeoisie. In fact, working class culture–technology, organization and know-how–must be based on bourgeois culture and grow from that. The working class must recruit bourgeois elements to help run the state. Learn from capitalism–learn its productive techniques, its science, and its organization, including the parliamentary traditions. Learn how to create public opinion, how to create consensus for our own class in the broadest, most thoroughgoing way, and based on that, how to create a genuine working class “culture.”

To overlook this basically reduces everything to intentions, to appearances. It doesn’t recognize the need for science. Science is precisely that which goes beyond one’s intentions, beyond the appearance of things to the essence, to a body of knowledge. We cannot build a new world without fully absorbing the science and knowledge of the old world. We cannot build socialism and fight for the interests of the working class without knowledge of capitalism and the knowledge that developed under the capitalist system. Organization, sciences, and technology are not inherently capitalist. Communists, the vanguard of the working class, have to appreciate those areas, learn them and know how to use them in the interest of the majority. Otherwise, the conception of working class dictatorship will be no more than a historical negation. It will only last as long as there’s a revolutionary flow, a kind of revolutionary festivity. Under those conditions, the masses are at their best, and together we overthrow the state through violent-revolution. But there it stops. If we do not learn from the old, pick out the progressive kernels, and use the progressive members of other classes, we will be unable to continue the revolution under the dictatorship of the proletariat. Socialism will fail, and capitalism will be restored.

Violent revolution is inevitable. There’s no way to overthrow the bourgeoisie other than smashing the capitalist state apparatus. It’s the only language they understand. Organizing immediately for the overthrow of the bourgeois state is a short-term task.

But having the ability to do that does not necessarily equal understanding how and being able to fight for the long-term interests of the working class. We must also learn how to build socialism, how to solve the problems of the economy, and how to unleash the productive forces most rapidly and with the highest quality. We still need to understand how to handle political and organizational democracy well so that it will fully unleash the workers’ might. In socialist planning and socialist investment criteria, one must look at the long-term and short-term interests as a whole.

For example, many people ask: How do you know that there is no exploitation in the Soviet Union and China, since the surplus produced by the workers is not 100% returned to them? In appearance, the same is true in the United States, that not everything produced goes back to the people directly and individually. We get back what we produce minus the surplus value. But the key is the ownership system and whose interests it serves. Under socialism, both the long- and short-term interests of the working class have to be dealt with.

This is still the era of imperialism, and socialist countries have to organize for national defense. Money invested in that sector of the economy cannot be consumed, nor does it produce other productive goods. In socialist countries like China or the Soviet Union, this expense is a tremendous burden because the overall economic productivity is low. Every year in the Soviet Union, 11% of their equivalent of the gross national product goes into defense. This is a considerable portion. Although their overall surplus every year is 17-18%, the national growth is only 5-6% because 11-12% of it goes into national defense.[15]

China, according to the Eighth Congress report, spent about 39% of their equivalent of the gross national product on national defense in the 1950’s. Quite a sum! Just imagine hundreds of thousands of peasants toiling the land, with 40% of the very little surplus they create going into the military every year. Mao said that socialism may exist in one or a few countries, but communism cannot be in one or few countries. Communism has to be worldwide. The necessary defeat of imperialism provides the material basis to unleash the superiority of the socialist system. The statistics make this clear.

An immediate interest of the working class is to safeguard against imperialist aggression. The budget for national defense, as an “investment criterion,” so to speak, creates conditions for internal construction. But it also severely contradicts another long-term interest–internal economic construction for socialism.

The money going into national defense of a socialist country does not return to the working class immediately. Nor does the money going into industrial investment, so-called capital investment for building industrial plants, benefit the workers right away. The United States faces that very problem today. U.S. corporations have to assure the stockowners quarterly, or in some cases monthly, profit. As a result, the capitalists do not put money into long-term investment, but please the stockholders in order to keep their jobs.

The returns from building steel mills and railroads are in the range of 20-30 years. Unlike capitalism, socialism is not shortsighted in that it wants all the surplus returned to the workers right away. That incorrect method of judging whether exploitation exists–by measuring whether all the surplus is returned to the workers in the immediate sense–leads to incorrectly drawing the conclusion that there is exploitation of surplus value there. Then one will see only opportunist leadership as sufficient to cause restoration.

But if we were to be solely concerned about the “bottom line,” that is, the need to safeguard the proletarian state power, then the economy and society can turn into a permanent state of “war-time communism.” With such a one-sided policy, the internal problems of socialist construction and socialist democracy cannot be solved. Over a period of time, the masses will get burned out and become disillusioned. They will not keep fighting for revolution without seeing any immediate material gains, if living conditions are not so different from before or become even harsher and there’s no prospect of improvement. After setting certain goals, they cannot even be mobilized on a war-time basis because command will not be effective. Commands and directives will backfire. The leadership becomes one-sided–orders from the top and nothing from below, no mass line. Then a “left” opportunist leadership will be developing at the top, and at the base, a “left” careerism (a particular form which fights bureaucracy in words). When the masses cannot be mobilized, there may be real restoration. The imperialists will take advantage of the situation by invading the country.

It is clear that revolutionaries cannot be concerned only with violent revolution. That is true for us in the United States today. The immediate question of the seizure of state power is our main concern. But the CWP has stressed all along, and probably to the point of overemphasis, the question of winning and training the advanced. We have the perspective of forging a core of cadres who are good not only for the seizure of state power hut also for organizing the life of the working class under socialism.

The main investment criterion under socialism, planned economy, is plan which takes into account both the short- and long-term interests of the working class. Other criteria like profit will be used to gauge efficiency of organization and quality of leadership, but profit cannot be the main criterion. The law of value cannot run the country, but it can serve planning.

Profit is used as an accounting unit. However, if $5 billion is invested into a steel mill, and the first year’s production is only $5 million, it does not mean the plant is losing money. By that method of judgment, the investment would not be profitable. Take another example: coal in China only returns a profit of 3-4 cents per ton. Watches yield a profit of $15 each. Judging the interest of the people by the profit and investing accordingly, national planning–planning to proportionately develop heavy, medium and light industries and agriculture, in relation to each other, for step-by-step growth–would be disrupted because everybody would rush to make watches but nobody would develop the mining industry. It’s clear that profit cannot be the sole or even the main investment criterion. It’s only an accounting unit.

Is Bureaucrats’ Rule Socialism?

If socialism is the dictatorship, the rule, of the working class, then how can we call the Soviet Union and China socialist since bureaucrats are ruling there? Even if they are socialist economically, workers seem to have little democracy and the bureaucrats clearly rule. To answer these questions, we must differentiate the political, ideological, and organizational essence of rule from the appearance of rule.

The Marxist concept of appearance and essence is an analytical method. They form an identity–a unity of opposites. The appearance of things generally acts as the threshold to the essence. When these two aspects are in harmony, the appearance will reflect the essence to varying degrees. However, when they are in contradiction, the appearance can distort and even hide the essence. U.S. imperialism has a very advanced form of rule while its essence is decadent and retrograde. Socialism on the other hand, has a primitive form of rule while its essence represents a big leap in the progress of humanity. “The social revolution of the nineteenth century (proletarian revolution –ed.) cannot draw its poetry from the past, but only from the future. It cannot begin with itself before it has stripped off all superstition in regard to the past. Earlier revolutions required recollections of past world history in order to drug themselves concerning their own content. In order to arrive at its own content, the revolution of the nineteenth century must let the dead bury their dead. There the phrase went beyond the content; here the content goes beyond the phrase.”[16]

In the United States there is an appearance of democracy. Citizens have the right to participate in elections and be elected to Congress and other positions, including the presidency. It seems that there is majority rule by workers. This appearance of democracy and majority rule covers up the real capitalist class nature of this system. The essence of this system is capitalist rule. We know the dictatorship of the capitalist class is at the bottom. That it is hard to see directly which class is ruling confuses many people about the class essence of the U.S. government. We must apply the dialectical materialist concept of the simultaneous struggle and interdependency between the appearance and essence of all this, in this instance, the state or government.

The appearance of military junta governments in third world countries reflects this essence more directly–the real class and individual nature of political rule. The essence of capitalist rule is generally more hidden in most advanced capitalist countries. In the imperialist states where capitalism is in its last stage, the rule of the capitalists is most sophisticated and perfected. The bourgeoisie have summed up the most advanced experiences of all the minority exploiting classes in history. They hide the essence of capitalist interests and dictatorship behind a whole legal array of electoral, legislative and executive processes. They rule indirectly through deception and media manipulation, rather than directly as more primitive exploiters in history did. The essence of capitalist rule is shielded and buffered by “checks and balances” and by the appearance of direct participation.

Rule by an exploiting class is the rule of the minority. Direct rule, where it is immediately apparent whose interests the government serves, is a simplistic and primitive stage of their ruling experience. Under that kind of rule, the class interests are naked. The ruling class’ actions are direct and brutal. The opposition, with strong leadership, can mobilize the majority of the exploited more rapidly to overthrow the ruling class. This helps to explain why in the last two decades, exploiters in over 50 third world countries were overthrown, while workers have not thrown out the rulers in any advanced capitalist country, despite heavy economic and political crises.

The socialist states are fundamentally different from capitalist or feudal states. For the first time in human history, the majority actually benefit from the state. This holds true despite their present limitations, which include a lack of organization to sustain “direct participation” by the workers and the lack of a system of “balance of power” among different sectors under a highly conscious rule by consensus. These limitations can be overcome only through continuously raising the consciousness of the workers and their overall cultural level, through developing more divisions of labor, more divergent views by raising the cultural and scientific level of the population. In other words, the state under socialism in the main is actually run according to the workers’ fundamental economic and political interests. We show this in the section on the lack of impoverishment of the proletariat in socialist states. Socialist rule, responsibility and accountability have to be direct, open, and above-board for all to see.

Ownership Determines State Power

The state is that aspect of the superstructure which, in comparison to ideology, religion, culture, etc., is most directly linked to property relations (the pattern of ownership of the means of production). Except for the brief period right after a revolution, of transition from one social system to another (e.g. from capitalism to socialism), the state always reflects the nature of the economic base. For the same reason, transformation from one economic base to another is always preceded by the transformation of state power, of leadership. A state that does not correspond to the nature of the economic base cannot last for long.

The class nature of state power is determined by the nature of the ownership of the means of production, not by the formal leadership of the government. Thus, the fact that there are still kings and queens in Japan and England does not make those two countries feudal. They are run by the bourgeoisie which own the means of production. The fact the president of the United States comes from the rank of its citizens does not make the United States a people’s democracy. It’s still bourgeois democracy, democracy for the bourgeoisie. The formal rule is only for deception. For the same reason, communists as presidents or as cabinet members in Italy or France do not make those countries socialist, unless it is only a short period of transition for the eventual transformation of the property relations in the economic base.

Under socialism, when the means of production are publicly owned, those in leadership do not have economic power. So even if a few bureaucrats abuse their power and privileges, this propertyless position locks them into the necessity of acting according to the interest of the prevailing economic base. This means according to the interest of the masses who own the means of production. The extent to which they can keep their positions is the extent to which they perform this task well.

Workers’ rule is exercised by the party which forms the leading core of society. But the dictatorship of the proletariat is not synonymous with the leading role, or rule of the party. The mechanism of the dictatorship of the proletariat includes the Soviets, the various mass organizations such as the trade unions, youth leagues, women organizations, peasant organizations, etc., which exert considerable influence as well as power over the bureaucrats. These are not only economic, but political organizations. These mass organizations take care of the interest of various sections of the masses, train their own leaders and supervise the state and their party. That’s why under socialism, it is not enough just to strengthen the party. It is essential that these mass organizations be strengthened and given the necessary resources to develop so that the masses can exercise their full role in society.

The dictatorship of the proletariat is much broader and more inclusive than the leading role of the party. And in the event that the party’s leadership systematically violates the interest of the proletariat, the proletariat can overthrow the whole leading core (as the Chinese people almost did during the Cultural Revolution) and still preserve workers’ rule. It is important to make this distinction theoretically, for there are people like the Line of March who equate dictatorship of the proletariat with the dictatorship of the party. This inevitably led them to the conclusion that the Cultural Revolution was undemocratic because it hit the party which is representative of workers’ rule. For the same reason, Line of March denounced the consciousness of the Polish workers as false consciousness. In essence they are saying that there is nothing the masses can do when the leaders turn revisionist, except perhaps to hope they have a change of heart. This is a great underestimation of the superiority of socialism and lacks the appreciation for the role and power of the dictatorship of the proletariat.

Socialist countries can make mistakes–even very serious mistakes–and remain socialist. Workers there retain their essential economic rights, which their counterparts under capitalism do not have. Workers’ rule can be hindered by revisionism of leading officials. This is when some of the workers’ “procedural rights,” as many call it, or their judicial, legal, democratic rights are infringed upon. Class is essentially an economic category. Class interest is, in the final analysis, economic interest. Economic rights of workers under socialism are fundamental gains of the socialist revolution. Procedural or legal rights without economic rights are formal, hollow and deceptive, as is the case here in the United States. But economic rights with little or no judicial rights is stifling, stale and primitive. So the struggle for procedural and legal rights is a necessary part of consolidating socialism and combatting revisionism. Lack of procedural rights weakens the dictatorship of the proletariat and kills the vigor of socialism. It can even endanger socialism by increasing the possibility of actual restoration of capitalism.

The means and resources available to the masses for the correction of mistakes and the criticism of revisionism vary according to historical conditions and circumstances. But this self-correcting process is everywhere dependent on subjective factors–on the collective consciousness, will and struggle of masses, parties, organizations and entire peoples. This is the great strength and superiority of socialism and the dictatorship of the proletariat.

Essence of Workers’ Rule

Lenin, Stalin and Mao constantly stressed bringing out the partisan nature of the state, the party and even art, literature, and the superstructure. The unconcealed class nature of the socialist state is an essential attribute to workers’ rule. Precisely because it is so direct for all to see, it cannot deceive the majority, even if they are untrained theoretically and “unsophisticated.”

Despite the bureaucrats’ insensitivity to and sometimes even outright coercion of the people in the Soviet Union and China, the honest nature of the socialist system is manifested in the sensitivity of socialist countries to political dissent and the speed with which genuine public opinion spreads. In the United States, on the other hand, struggles are buffered and isolated by a purposely “pluralistic/heterogeneous,” over-communicated society, where “everything is everything.” The real opposition and struggles of the working class are rendered ineffective or channeled into a vicious runaround of reforms, delays, pitting one group against another and burning them out. Without leadership by a vanguard party, these struggles will not lead to accumulation of forces to overthrow the bourgeois class rule.

Bureaucracy in a big way does exist in the Soviet Union and China. Bureaucracy is a bad aspect of organization. But organization is an indispensable part of workers’ rule. The main problem historically of socialist countries is lack of organization and organizational know-how. Chiefly due to this main problem and its adjunct–the officials’ insulation and detachment from the masses at the grassroots–the danger of the separation between superstructure and base, between production relations and productive forces in all their infinite varieties, between management and workers, between the vanguard party and the masses, grows.

To the degree that sophisticated bourgeois propaganda or real brain-washing makes us feel we have real democracy and real social power, we fail to see the essence of workers’ rule under socialism. We have to use science to dissect the essence of workers’ rule and interests and to see beyond the problems which remain to be solved under socialism. Only to that extent will it be clear what’s wrong with this bourgeois democratic system.

Yes, socialism has many problems, but direct visibility of the problems is not one of them. It is a merit of an honest, inherently accountable system. It is a characteristic of states run in the interest of the majority for the first time in human history.

Capitalist System Not Easily Restored

Yao Wen-yuan made two arguments in his pamphlet “On The Social Basis of the Lin Piao Anti-Party Clique.” One centers on the law of value which will be discussed in the next essay. The other revolves around small capitalism. This is a question of the relationship between the restoration of capitalism in the base, which does happen under socialism in the localities, and the restoration of capitalism in the society as a whole, that is, changing the character of the proletarian state. First of all, the peasantry can restore capitalism. They can simply break up the communes, have their private lands and thus create “capitalist elements” in the economy. But the economy is still subsistence. Small factories, and relatively larger factories in any particular locality, can restore capitalism by remaining outside state planning. There are also plants producing auxiliary goods such as nuts and bolts which are not and cannot be included in the state planning (which will be explained in the next essay). These plants can sell their products in the market according to the law of supply and demand. They will use the profit and reinvest in their own industry in the particular plant. That is possible and will happen. But Yao’s fallacy was to generalize that process. He assumed that because this potential for capitalism, locally and on a small scale, could be realized all over China or the Soviet Union, then the individual old and new capitalists would inevitably demand a general representative within the leadership of the state. That leadership, in the final analysis, is the party. Once in a high-level position, that general representative would be the capitalist-roader in power and would systematically dismantle the state and restore capitalism by carrying out revisionist policies.

These policies, in Yao’s view, consist of utilizing the law of value more extensively and letting experts take command rather than stressing “red and expert.” The capitalist-roaders would act according to their plan and put their own people (capitalist representatives) into key ministries, industries, and various provinces, cities, communes, factories and schools. By representing capitalist interest, they would make capitalism grow. Thus, revisionists in power mean capitalists in power, and capitalism is restored as a result of a “general representative” taking over.

Yao Wen-yuan’s argument breaks down on two accounts. One, the limits of local industries and agriculture dictate that they can’t restore capitalism by themselves. Two, just as there can be no “peaceful transition to socialism,” there can be no “peaceful transition” from socialism back to capitalism.

There is local capitalism in countries like Soviet Union and China, and there can be many local capitalists. But those capitalists cannot hire other laborers. They cannot reinvest their profit in the same area where they have interest. If those local capitalists grow to the point where they supply an abundance of products, then they go under planning. Thus they have no power. Reinvestment of surplus as capital is illegal, and the state will enforce the law with armed forces, police and the judicial system. The local capitalists will be kicked out of their positions. If those industries which produce auxiliary products like nuts and bolts develop to the extent that they can supply these parts nationally, their operation will become part of the economic plan and they will go into state public ownership. As long as they are small-scale, they may stay in the market. Allowing them to exist is basically capitalism. But as long as the finance, heavy industry, basic crops of agriculture (such as grain and cotton) and the basic items of light and medium industries (such as chemicals, transportation and tractors) are planned in relation to the balanced development of the economy, then the state has ownership of the key means of production. With state ownership of finance and the main industries, planning can still go on. The plan will direct these key sectors, which control the national economy. It is contradictory to say that in essence the ownership is private and yet there is planning. This breaks down in practice.

Small Capitalists Not the Enemy

A key struggle in our Central Committee plenary session leading up to the Founding Congress in October 1979 was about “mom-and-pop” stores in the United States. I struggled that mom-and-pop stores, small capitalists, small farmers and petty bourgeoisie should not be nationalized and should be allowed to exist under socialism. The majority of the Central Committee opposed that position. As long as the state controls trucking, transportation, and manufacturing of essential items, then mom-and-pop stores will aid distribution. The country is too vast to plan distribution outlets in every neighborhood. Therefore our socialist program should be to defend mom-and-pop stores, rather than to confiscate or nationalize them.

The existence of mom-and-pop stores and family farms will not lead to the restoration of capitalism as long as the proletarian state owns the key means of production–heavy industry, transportation, and finance, which the rest depend on. Just as banks control small farmers today, state banks under working class leadership will hold the life-line to these small businesses. The incorrect line of confiscating or nationalizing is based on a line of abstract classes and not on understanding the dynamics of modern society and the roles of large-scale production and finance. The mom-and-pop store owners and family farmers are friends of the proletariat. We must unite with them against our common enemy, the monopolies, which are wiping out the small producers and distributors.

Yao’s line is that small capitalism is antagonistic to socialism because it will lead to a national representative and to the restoration of capitalism on a larger scale. His incorrect view towards small things and local things does not recognize the significance of ownership of the main means of production and finance. In our Party a similar line, not spoken explicitly, holds that all classes and strata other than national minorities and the working class are the enemies and form a reactionary mess.

There is a basic fallacy to this explanation of restoration. As long as the general representatives of capitalism do not advocate the restoration of capitalism, and do not abolish planning and the Party in practice, there is no way revisionist policies can lead to restoration of capitalism. They may mean many right lines in practice. But as long as the state is a workers’ state, and as a whole is developing socialist ownership with a planned economy, capitalism is not being restored. Capitalism will only be restored when capital takes over and there can be no planning. As long as planning dominates, there can be no capitalism. Either capital is in command or planning is in command.

A major struggle in China (and one reason for the Cultural Revolution) is the inequality of distribution, even when the ownership has changed from bourgeoisie to the proletarian state. Bourgeois right still exists among the higher level managers. There are genuine problems that must be solved though there seems to be excessive concern about bourgeois influence. Attempts to restore capitalism in the base that try to go to higher levels have to be stopped. But capitalism cannot be restored until the new bourgeoisie gathers enough force to dismantle (smash) the whole state and the whole economy. It requires much more than taking over the party. It’s very easy for the peasantry to take over their subsistence economy, even easy for small, light industry to take over the plants and find their own markets, black markets. But it’s very hard to take over steel mills and the like, because people cannot eat steel. It must be sold, marketed to medium and large industries. There’s no way for capitalists to market it without holding state power, dismantling the whole economy and abolishing planning. The state machinery and organization must be smashed at every level. That has not happened in the Soviet Union and China and the best evidence is the continued dominance of planning. Planning and organizing the economy involves 80% of the state apparatus. The state controls the commanding heights of finance and the main industries. As long as capital does not have command and the market forces have not taken over the whole economy, restoration of capitalism is not possible. There must be a qualitative leap beyond all the revisionist policies added together.

Superiority of Socialist System

Dismantling socialism is not that easy. It is especially difficult after the initial stage of violent overthrow of the old state, and the dismantling of the old state power, the instituting of the socialized ownership of the means of production by nationalizing the main means of production like heavy industry, and bringing the whole economy under a national plan. There is greater possibility of the restoration of capitalism when the process of revolution is not thoroughgoing. In the initial stage when seizure of state power is through the armed forces but revolution has not been carried out in the economic base, consolidating the material basis of socialism (public ownership and planned economy), then restoration can proceed very quickly and relatively easily. Examples are the counter-revolutions of Chile and Indonesia. Once the ownership changes, it is very hard to dismantle socialism. For the same reason, it’s difficult for us to make revolution. Fundamentally there is a relative independence in the organization of state power, be it a capitalist or socialist economy.

An additional block to restoration is that workers and people in the government at all levels will not easily give up their jobs. They will not permit the dissolution of their jobs or the revocation of their basic right to a guaranteed job. It is a big leap from a planned national economy back to a free market because the basic rights, one by one, level by level, have to be taken back from the people.

Once state power is taken over, there is relative independence to the socialist organization which is established. It is extremely hard to dismantle it without a violent overthrow, an organized effort led by the capitalists with the military defeat and economic paralysis of socialism by force.

In Poland, for example, the workers clearly have the power to paralyze the economy. But if the independent union, Solidarity, advocated the restoration of capitalism, workers would not back the union. From interviews conducted with workers, it is clear they support socialism. They just want more democracy under socialism: the right to speak up, criticize leadership and purge incompetent bureaucrats. If they advocated the restoration of free-market economy, their state jobs would be jeopardized. Their pay is guaranteed by the government. A return to capitalism would throw them into the market to be hired and fired at will by the capitalists. That is an obvious implication, and the Polish workers have the consciousness not to strike for that. It is basically a question of what the masses want–capitalism or socialism. In the final analysis, their stand will make the difference.

Some people do not understand this. They say the Polish workers’ strike should be smashed because it is pro-imperialist and anti-socialist. That is ridiculous. First of all workers over there are definitely not advocating capitalism. If anything, they advocate socialism. Secondly, the danger of imperialist intervention is very slight. If the danger of invasion exists, it comes from the Soviet Union. Thirdly, the Polish army stands on the side of workers. The revisionists in the Polish Party do not dare call on the army to suppress the strikers. If they refused to put down the worker’s strike, to shoot at their own class brothers and sisters, certainly they would take up arms to defend their country against foreign invasion. If the Soviet Union were to invade Poland, the Polish army would turn its guns against any invading army. If the Polish army would readily turn their guns against the Soviet army, certainly western imperialists know that if they intervened with armed forces, it would polarize the country against imperialism. They certainly don’t want that, so the danger of western imperialist intervention is minimal at this point.

We support the Polish workers and do not fear restoration. The current events in Poland signify a revolution from below forcing the revisionists to make changes. There are many genuine elements within the Party and many workers in Solidarity are also Party members. They will fight for the correct line and policies inside the Party, and are forcing a change in the leadership of the Polish Party. The situation is excellent.


[1] Marx, op. cit., p.170.

[2] Cited in Fundamentals, op. cit., p.89.

[3] William G. Hyland, “Brezhnev and Beyond,” Foreign Affairs, Fall 1979, p.63.

[4] Manuel Castell, The Economic Crisis and American Society (New Jersey: Princeton University Press, 1980), p.180.

[5] Economic Performances and the Military Burden in the Soviet Union, Joint Economic Committee, Congress of the United States (Washington, D.C.: U.S. Government Printing Office, 1970).

[6] Soviet Economic Prospects for the Seventies, Joint Economic Committee, Congress of the United States (Washington, D.C.: U.S. Government Printing Office, 1973).

[7] David Laibman, “The Soviet Economy After Six Decades,” Six Decades That Changed the World (New York: N.W.R. Publications, Inc., 1978).

[8] David B. Kimmelman, M.D., “Health Care in the U.S.S.R.,” Six Decades That Changed the World, p.200.

[9] Soviet Economy Forges Ahead (Moscow: Progress Publishers, 1973), pp.30-31.

[10] Hyland, op. cit., p.64.

[11] Documents of the 26th Congress of the C.P.S.U., Reprints From the Soviet Press, Vol. 32, Nos. 5-6-7, April 15, 1981 (New York: Compass Publications).

[12] Zhou Enlai, “Ten Glorious Years,” Selected Works, Vol. 2 (Hong Kong: 1976), pp.364-470.

[13] Xue Muqiao, China’s Socialist Economy (Beijing: Foreign Languages Press, 1981), pp.170-177.

[14] Yao Yilin, “Report on the Readjustment of the 1981 Economic Plan and State Revenue and Expenditure,” Beijing Review, March 16, 1981, pp.14-15.

[15] Hyland, op. cit., p.61.

[16] Karl Marx, The Eighteenth Brumaire of Louis Bonaparte (Peking: Foreign Languages Press, 1978), p.13.