Encyclopedia of Anti-Revisionism On-Line

P.J., Communist Federation of Britain (Marxist-Leninist)

The Soviet Economy and the Restoration of Capitalism

First Published: Marxist-Leninist Quarterly Nos. 8 & 9, Autumn/Winter 1974-5.
Transcription, Editing and Markup: Sam Richards and Paul Saba
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The debate over the nature of the Soviet Union remains one of the most contentious issues within the international workers movement. Since the early critiques of revisionism by the Albanian and Chinese comrades Marxist-Leninists in the West have attempted to get to grips with the problems of the transition to socialism and the subsequent degeneration in the Soviet Union, as well as the associated phenomenon of the degeneration of the Western European ’Communist’ Parties. The course of this debate has revealed the dangers of remaining purely on the surface of these critiques whilst failing to appreciate the experience and arguments which lie behind them. One of our tasks in building a Marxist Leninist Party in Britain is the appropriation of the knowledge and experience of the international workers movement, including both its successes and its failures.

An associated problem is the spread of Trotskyite versions of ’Marxism’ in the west. In part, this is a consequence of revisionism, since the failure of the ’communist’ parties to put forward a credible version of Soviet history since 1924 has helped give an appearance of consistency to the Trotskyite view of the world. In reality however talk of ’socialism’ and the use of terms such as ’deformed’ or ’degenerated’ workers states in Eastern Europe adds to the confusion which surrounds this area. The task facing Marxist Leninists is to put forward a clear conception of what we mean by Socialism and to be able to explain developments in the Soviet Union in a comprehensible manner.

An article by Ernest Mandel (’The Soviet Economy Today’ in The International Socialist Review, June 1972) is instructive to the extent that it reveals in a particularly clear way the confusions over the question of transition to socialism, and in a wider context, the theoretical confusions within the Trotskyite version of Marxism. It is for this reason and not because it is of value in itself that a review of this article has been prepared.


Basically, Mandel’s main line of attack is to attempt to demonstrate the impossibility of a peaceful restoration of capitalism. Thus by definition the Soviet Union cannot be characterised as capitalist. According to Mandel, the recent polemic between the Soviet Union and China are merely inter-bureaucratic squabbles which simply repeat the debates within the Trotskyite movement in the 1930s. Mandel includes in this dismissal the ’pro-Peking’ political economists Sweezy and Bettelheim[1] who, he says, fail to understand the basic concepts of Marxian economics. Mandel states the basic Marxist formulation that any concrete society, or social formation, is a result of a ’concrete historical process’ which combines the results of a number of different modes of production and must be studied in the light of ’combined, uneven development. As we know, this is the basis of Marx’s own method in characterising the successive periods of history, and in characterising types of society as feudal, capitalist, or socialist. We look first at the ’relations of production appropriate to a “given stage in the development of material forces of production.”

It is rarely the case however that any single concrete society will be completely capitalist, say, and this is of central importance when we examine societies which are in transition from one form to the next. Mandel however believes that a ’theory’ of transition is only possible if we first begin with a concept of ’pure capitalism’ which can then be compared with ’real history’ as a guide to concrete analysis. Thus he argues that we should not limit our studies to insufficiently developed societies (such as the USSR, China etc.) as we can then only achieve a distorted theory of transition to socialism. We should consider the hypothetical instances of France or the United States in the transition to socialism when ’centralised accounting (would be) made possible thanks to computers’[2]. It is unfortunate for Mandel that the only concrete cases that we have to learn from are however so-called ’underdeveloped’ societies.

The construction of socialism according to Mandel is essentially about the withering away of commodity production. Thus although the Soviet Union is regarded by Mandel as being in transition it cannot achieve its aim because it is undeveloped, In other words it is neither capitalist nor socialist, but is apparently both at once. The argument for this strange situation may be summarised as follows.

In the Soviet Union the means of production (machinery, raw materials etc.) do not circulate on the open market; one cannot buy plant etc. Thus the labour which produced them is not recognised as socially necessary by means of a market but is planned. The dominant sector of economic activity (production of means of production or ’heavy industry’) is not therefore run on capitalist lines, according to the financial success of the enterprise, but is governed by the needs of the society through the plan. The production of consumer goods is subject to different laws however. Goods can be bought and sold in the shops and when purchased are privately owned. Consequently production must be geared much more to the market, which expresses the demand for such goods. It is not therefore susceptible to planning. Thus the principal contradiction in the soviet economy is between a planned economy and a commodity based market economy. Two systems of property co-exist and the law of value operates in the sector of production of consumption goods alongside the ’conscious allocation of material resources’ in the ’heavy industry’ sector. In short a capitalist mode of production operates alongside a socialist one.

Now from the point of view of historical materialism, it is impossible to conceive of an economy which operated for long in this way without one or other of the conflicting systems of production becoming dominant and eroding the other. For example, it would be the case that the department of consumer goods production received machinery from the department of production of means of production, whilst the wages of the workers in both sectors are spent in the department of consumer good production. In other words the two sectors are in reality interconnected. It was this interconnection which enabled Marx to explain the circulation of capital as a whole within a concrete society, and enabled him to explain the possibility and necessity of crises under capitalism. It is therefore nonsensical for Mandel to define one sector as ’planned’ and the other as governed by the ’market’ without analysing how this occurs and giving concrete examples from the Soviet economy. I will return to this point below however, after describing the rest of Mandel’s argument.

Mandel continues on this erroneous basis to explain that the Soviet economy is governed by a ’dual logic’ – planning relations versus market relations. The latter cannot gain the upper hand because this would severely disrupt the economy and spark off vigorous resistance by the proletariat:

...planned relations of production, born of the October Revolution cannot be resolved without first crushing the furious resistance of the Soviet proletariat.

In other words the “peaceful” restoration of capitalism cannot be achieved! According to Mandel the economic reforms of the 1960s which introduced the criterion of profitability into the soviet economy did not signify the introduction of capitalism because no real competition exists. Since Mandel defines the essence of capitalism as being competition then these reforms simply introduce a form of market socialism, which Mandel calls a ’pseudo-market’ which will serve to aid ’optimised resource utilisation’. In fact Mandel does not rule out, at least theoretically, the re-establishment of capitalism, but he points out that, if achieved, this would not be ’state capitalism’ but simply ’capitalism’ since private property would be re-introduced and ’socialist planning relations’ would be disintegrated. The basis of this would be our old friend ’underdevelopment’, since the level of development of productive forces in the Soviet Union would not allow the new relations of production to consolidate themselves spontaneously (!) in a climate of expanding social wealth and creative enthusiasm of the producers!

In fact it is because the attempt to construct socialism in the Soviet Union is ’premature’ argues Mandel, echoing the Mensheviks (and later on Trotsky himself), that we are faced with the ’bureaucratic deformation’. The bureaucracy does not constitute a new ruling class since it does not play a ’fundamental historic role in production’ and it does not have ’an historic mission to assure accelerated growth’. The class structure of the Soviet Union is in fact an ’accident’:

...The bureaucracy is only the product of an accident of the historical process just as there are numerous accidents in the historical process characterising the epoch of transition between feudalism and capitalism.[3]

We need describe Mandel’s argument no further in order to illustrate its complete confusion.


Reading Mandel’s article one could be led to believe that no one had discussed the problematic nature of the transition to socialism before Trotsky, and that the Sino-Soviet dispute had been copied word for word from inter-Trotskyite disputes in the 30s, with out due credit being given. As far as we are concerned however the polemic between the Russian and Chinese movement which matured in the early 60s, but which had its material-foundation in the concrete problems posed by the context of attempts to build socialism in the USSR and China, and the increasingly divergent manner in which these problems were tackled. The polemic itself cannot be reduced to a mere squabble between bureaucracies but is based on political differences. The basic premises of the debate were however raised before this period – theoretically by Marx and Engels and practically by Lenin.

It was Marx and Engels themselves who first pointed out the necessity for a transitional phase between capitalism and the attainment of a communist society. This was firstly because the law of value, wage labour and the market etc. Could not be simply abolished, but must be replaced as the main measuring rod for production. Secondly, it was recognised that even when the means of production had been fully socialised it was likely that capitalist norms of distribution would still survive, that is to say reward would still be based on the individual producers contribution, rather than on his needs. Thus, the wage system, one of the essential features of capitalist production, would still be present until the real basis for its withering away had been attained.[4]

The situation faced by the Bolsheviks however after the seizure of state power in 1917 was a different one. Far from having attained a stable socialised system of production this was a situation in which relatively backward sectors of capitalist industry coexisted with ’features and properties’ of socialism. For Lenin, this backwardness was not the dominant factor, although rapid industrialisation was regarded as a priority. On the contrary, the form of the state was stressed as the main factor ensuring the safeguarding of the gains of the October Revolution. The defense of the dictatorship of the proletariat and the politics which were followed were all important. Lenin recognised the ever-present danger of a capitalist restoration, due to the overwhelming presence of ’ideological remnants of the old society’. Thus the key factor in the construction of socialism was that ’politics must be in command’.

No one I think, in studying the question of the economic system of Russia, has denied its transitional character. Nor, I think has any Communist denied that the term Soviet Socialist Republic implies the determination of the Soviet power to achieve the transition to socialism, and not that the existing economic system is recognised as a socialist order.[5]

Furthermore, for Lenin the correct policy could only follow from an analysis of the concrete situation. This was characterised as one in which five systems of production (patriarchal, small commodity production, private capitalism, state capitalism and socialism) co-existed within the Russian economy as a whole. This being the case, Lenin argued the necessity for developing the capitalist sector, under state control, as stages toward overcoming the more backward sectors, moving toward industrialisation, and simultaneously maintaining the support of the workers and peasantry behind the dictatorship of the proletariat.[6]

It can easily be seen that this policy was distinct from Mandel’s fantasies; the construction of socialism, whether in an advanced or in an ’underdeveloped’ society is not a question of the primacy of the economic or of the development of a sophisticated computer technology to help with the accounting. It is a question of placing politics in command, a point stressed by the CCP from the outset of the dispute with the CPSU.[7] Mandel however seeks to disregard the actual circumstances in which attempts to construct socialism have occurred and wishes to speculate about the transition to socialism in societies in which it has not occurred, These pleasant little daydreams are constantly accompanied by hazy notion of the soviet economy (nowhere backed up by fact) and a tendency to regard the productive forces as always and everywhere the dominant factor.[8]


Mandel’s basic confusion paves the way for a curious conception of the soviet economy, a conception in which the state is always secondary in which the economy is separated into two sectors, which apparently function independently of each other. More central however is that the ’socialist sector (production and distribution of means of production) is defined as such simply by virtue of the fact that, this sector is state owned and subject to planning Mandel nowhere asks what type of planning this is (as if all planning were automatically socialist) or to what extent this ’planning’ is effective (as if all planning were 100% successful).

Consequently we are not able to, gauge what role the market actually plays in the Soviet Union, whether it is taking on greater or lesser importance, how it relates, to the state owned sector and so on. We are simply told that the market mechanism cannot become dominant and the argument is left at that!

For Marxist-Leninists, the mere existence of a market cannot be the prime factor governing our assessment of a particular society. This is because the market mechanism only exists because it plays a necessary role in the distribution of goods and in the transformation of those goods into money, which is necessary if production is to continue. Consequently, we can say that the market exists because capitalist social relations exist (either as the dominant form of production as under capitalism, or in enclaves not yet socialised as during the period of transition towards socialism).

The market plays an essential role under capitalism because: of the fact that the products of labour are commodities at the same time as they are useful objects which fulfil a particular need. This means that they embody a measurable value and can thus be exchanged for a certain number of other commodities, or, more commonly, can be exchanged for a definite amount of money. Furthermore, the market is the only means of realising the value embodied in the product, and is thus the only guarantee that the labour used during the production of this item was in fact necessary. (Thus, if there is no ’demand’ for the product in the market, the item will remain unsold, the capitalist will receive no return for it, and it will be unused.) The centrality of the market is only necessary because the producers of goods do not control production themselves and plan it according to need, but work for a wage whilst the capitalist produces for profit, and not for use. In other words the predominance of capitalist social relations, in which the producers are deprived of control over the system of production, necessitates the role of the market; it is this mechanism that provides the only standard of calculation and distribution of resources of the capitalist.

Viewed in this way, it is clear that the market can not operate as a ’pseudo-market’ in the way described by Mandel.[9] To the extent that capitalist relations exist then the market will be necessary, to the extent that they disappear, then the market will not be necessary. This is not to argue however that the market will play no role at all in a society which is attempting to construct socialism. The central point for a working class which holds state power is to assess the degree to which market forces are necessary and to take steps to increasingly limit its sphere of operation. To identify the ’socialist sector’ by state ownership, and the ’capitalist sector’ by the play of market forces as Mandel does is to miss the point completely.

But what role does the market play during the transitional period? It is clear from the experience of the Soviet Union and China that the installation of a proletarian dictatorship will not of itself solve the problems of socialising the economy, whether the revolution takes place in a developed or in an underdeveloped society. (Even the computers have to be programmed, unless Mandel has produced some inherently socialist computers.) What is involved in socialisation cannot be reduced to ’nationalisation’ or legal state ownership, as the examples of nationalisation in the West should now have clearly demonstrated. The socialisation process involves arriving at a position where available labour (and other resources) can be distributed according to an order of priorities decided by the workers themselves. This position will not be attained spontaneously however, this is why the plan, and socialist planning mechanisms and criteria are necessary.[10]

This gradual replacement of the market by the plan involves an analysis of the real wealth which is at the disposal of society if the plan is to serve as an effective measure of the utility of resources. In the absence of this the plan will simply be asserted over the market, in very much the same way as this happens’ with capitalist planning.[11]

Thus to the extent that the market mechanism exists in the transition phase we must recognise that it plays a necessary and real role (not a ’pseudo’ role), but that it existence implies the continuation of exchange relationships characteristic of a capitalist economy. Consequently, explanations given by Preobrajensky and Stalin (which are substantially repeated by Trotsky and Mandel)[12] for the continued existence of the value form under socialism are not, in themselves sufficient. At best the argument will be limited to the level of the laws on the statute book, and refer only to the existence of different forms of property (e.g. state owned industry, collectively owned agriculture, private agricultural plots etc.). This may account for the fact that market relationships exist between the different categories of ’owners’ i.e. that farm produce is sold to state agencies, but does not deal with the existence of purchase, sale and prices within the state sector itself.

A major part of Mandel’s argument rests on the fact that legal private ownership does not exist within the state sector; yet it is clear that when e.g. machinery produced in one plant is sent to another a price is paid in money, which has the role of an equivalent value for the product, in other words products are bought and sold within the state sector itself. This cannot be explained away by the existence of ’other forms of property’. Neither can it be explained away by the fact that ’investment is determined by the plan, or that prices used within the state sector are merely ’formal’ indicators for the purposes of accounting since the necessity for calculation in terms of exchange value is totally ignored by this argument. To assert that this is a formal matter is to ignore the question of why this ’form’ is necessary.

Marx, in his analysis of the capitalist mode of production, pointed out such an exchange mechanism was a necessary form of relationship between products and between the labourers in different units of production (or firms). This holds whether the individual enterprise produces means of production or articles for private consumption. The relationship can only be transformed to the extent that the state acts effectively in treating the means of production as social means of production, and this entails a different organisation of production at the level of the enterprise.

To give a concrete example from the Chinese experience this entails not only a system of workers control of the enterprise, but a system of planning in which the needs of the national economy are considered, in which the plan is in the first instance consultative and in which workers go out into the shops to consult with retailers and consumers on the demand, quality etc, as is the practice at the textile factory in Peking.[13] This means that the means of production are not only legally owned by the workers (through nationalisation) but are effectively controlled by them to the extent that it is the workers who decide on their use.

This does not initially modify the independence between the units of production but this becomes possible to the extent that planning links these units, not only at the level of ministries at the national scale but at the level of workers in different units themselves. What is also involved however is that exchanges of products between different units are not governed by market prices, but that prices are planned without reference to market criteria. In China for example prices in the state sector are based on cost price. Goods pass to the state commerce offices at sale price plus a margin of 15% which forms the proportion to be devoted to the accumulation fund. Thus profit whether private or belonging to the firm itself is non-existent. Thus exchanges within this sector rest on social criteria and not on monetary calculation. (We shall examine below the degree to which this is the case in the Soviet Union.) It is clear then that real coordination does not depend on planning techniques, on administrative competence, on good intentions, or on computers (though the latter would certainly help once the political basis of planning was established). Socialist planning is part of the growth of the political conditions, the real participation of the masses in the construction and implementation of the plan alongside the development of institutions which are able to analyse economic and social activity, to fix and control prices in short on the development of socialist relations of production. To the extent that market relations continue to exist in the transition period this fact must be explained by the existence of a specific system of relations of production and productive forces, and not simply with reference to scarcity or backwardness of the economy.


The system of production and distribution also determines the relations between the different agents of production and those between groups i.e. ,which groups control capital and accumulation and which groups produce wealth. Thus it is only by examining the specific organisation of production that we can assess whether or not the Soviet leadership, managerial cadres etc. are a class, or as Mandel would have it a ’stratum of the proletariat ’[14]. In either case, it cannot be an ’accident ’.

In any system in which capitalist social relations operate i.e. in which the labourer is effectively separated from the control of the means of production and does not have the power to dispose of the product, then the associated problems of control and domination will come into play. It is a key component of capitalist ideology that the capitalist appears as the necessary director and organiser of production (he somehow possesses managerial ’expertise’. There is nothing to prevent a similar process under a state owned system as long as one group retains the power to appropriate and direct the labour of another. In fact there is a strong possibility of this under a state centralised system of production, but when the decision making process and effective control of the state and of production passes into the hands of a bureaucratic grouping, the danger of a progressive restoration of capitalism becomes very real. This is why the form of the state – that it remains a workers state – is central in the transition period. This is also why the arguments about the possibility or otherwise of a ’peaceful restoration of capitalism’ are [undistinguishable word] beside the point. Why is it necessary for the new bourgeoisie to seize power by means of an insurrection against the state, when they already control it, including centralised repressive machinery?

In the USSR it is clear that the Soviet Union underwent a ’bureaucratic deformation’ which was never corrected. Successive reforms of the economy and planning processes have led to the situation where capitalist social relations are now reproduced on an ever increasing scale For example, in the USSR it is the enterprise which now retains the possession of means of production and the capacity to accumulate or consume these in production, using market criteria in making these decisions. Enterprises are increasingly separated from one other, and within this situation it is the manager who retains control and decision making power. Mandel would in fact accept this last point, yet he refuses to accept that products within the state sector circulate as commodities or that there is a class contradiction, for him the economy is controlled by a ’bureaucracy’[15] which operates a ’socialist’ plan although its content and effectiveness is never analysed.

Mandel’s argument here is formal and illusory. As we argued above, the actual relations which exist between enterprises in the Soviet Union is shown by the fact that the value form operates in the distribution and circulation of products, In the absence of the development of real relations of production and effective planning this condition can only remain and grow. Soviet ’planning’ can only displace the contradiction and enable the type of ’intervention’ in the economy similar to that achieved by western capitalist states. The mere existence of the plan cannot abolish market relations by declaration, nor can it substitute itself for them; they can only be overcome by a type of political action of a type which the Soviet leadership could not now initiate. Mandel’s concept of ’planning relations’ is nonsensical both from the point of view of historical materialism and the concrete experience of both the Soviet Union and China. What has been proved by both the failure of soviet planning, and by changes in China since the Cultural Revolution, is that the action and scope of the plan is determined by the course of the class struggle.


The presentation of data showing the existence of market relations, wage differentials, private agricultural property etc will not in itself prove whether or not capitalism has or has not been restored in the Soviet Union. It is the overall trend which is the key factor, and this can only be assessed by examining the structure of the soviet economy as a whole, along with the character of the ruling groups, their political line etc. What is urgently needed is a historical analysis of the degeneration of the Soviet Union which laid the basis for the restoration of capitalism but this is beyond the scope of this review. What can be shown however is the basically capitalist nature of the production process and relations of production in the USSR.

The basic questions of the principles of socialist planning we re never thoroughly investigated in the Soviet Union, due partly to the urgency of practical tasks of construction and development in the thirties, and in a situation in which these problems had never been faced before. Thus debates over the law of value under socialism tended to reiterate the arguments of Preobrajensky as this fairly typical example shows:

...the law of value is not abrogated in the socialist system of national economy, on the contrary it functions under socialism but it functions in a transformed manner![16]

... in a socialist economy the law of value means the necessity of conducting a monetary, not merely a physical registration and planning of the costs of production... The state plan in socialist economy makes use of the law of value to achieve the requisite proportions in producing the social product and in distributing social labour.[17]

What was not clear in these discussions was whether or not the operation of the law of value maintained the use of the value form (i.e. exchange value of the commodity) predominant under capitalism. This however was ’resolved during debates which took place in 1956:

The economists debate which started in 1956, was quick to interpret the question in terms of price policy that an end should be made to ’arbitrary’ price-fixing as an instrument of planning policy (this being denounced as ’subjectivism’ in planning). Instead, prices should be more closely related to value, in the sense that they should reflect the ’normal’ expenditure of social labour in the course of production; in particular this should be done with regard to the relationship between the prices of capital goods (products of Group A industries) and the prices of consumers goods (products of Group Bind industries).[18]

What is being said here is that political criteria (’arbitrary’) should be replaced by market concerns. (It is of course true that the manner of price planning in the Soviet Union prior to this date was ’subjective’ to the extent that it was increasingly divorced from the overall planning of production, and more centrally from the participation of the masses; to this extent soviet planning demonstrates a wild oscillation from ’leftist’ to ’rightest’ deviations.) This trend was in marked contrast to Stalin’s view that existing commodity relations were beginning to hamper the development of productive forces[19] and was confirmed in the 1961 Economic Programme which referred to the need to combine the planning of ’key targets’, ’coordinating and dovetailing plans drawn up locally’ and the ’extension of operative independence and initiative of enterprises’. In themselves, there was nothing wrong with these objectives, since they represented a move away from the pre-1961 bureaucratic centralist planning methods, but in the context of later reforms such as the granting of the right of enterprises to contract directly for its products and its supplies with other agencies[20] a greater degree of activity was gradually allowed outside the plan, at the same time as enterprises established their independence.

It is within this context that the Liberman reforms of 1965 must be examined. As described by Dobb they took the following form:

Enterprises were to be given merely a general production target expressed in terms of marketed output (with limits on their total wage funds and stipulated payments from and to the state budget). Given this they were to have full responsibility for working out their detailed output-plan and other indices. Profitability was to be established as the main index or criterion of efficient performance; and an incentive fund, financed by proportionate deductions from profit, was to be made the primary source for bonus payments to workers in each enterprise.[21]

This step clearly represented a weakening of the plan, with the added attraction of a sound basis for further erosion of what remained of the former system. The actual effect of these reforms has thus been to stimulate a form of ’competition’ between firms, to the extent at some have been able to increase their profits by changing the proportion in which they produced different lines of goods, since some commodities yield more profit than others.[22] Thus, in opposition to the defenders of the soviet system, it can be argued that a form of the attraction of funds to more profitable branches of production is possible under the reformed soviet economy. In this situation, production use appears to be a secondary consideration, as does Mandel’s dogmatic assertion of ’planned investment’.

The basic logic of the soviet economy thus leads to an erosion of planning and the concentration of greater economic power in the firm, and within the individual unit, onto the manager. Mandel is quite wrong when he describes the fundamental dynamic of the soviet economy as the contradiction between socialist and capitalist elements. It is in fact a downward spiral leading away from any but the most ’indicative’ form of monopoly capitalist planning.

In agriculture we can detect a similar process. This sector has been marked by failure to discover a formula for relating incentives to a system of individual and collective work with the long term perspective of winning over the masses for support for an eventual state system[23]. The end result has been a series of compromises in the 1960s, leading to the following:

In 1963 family plots on collective and state farms in Kazakhstan produced almost four times the number of potatoes produced in the public sector.

The number, of days spent on collective work has systematically declined (180 per year in the Ukraine, 135 in Georgia) and the consequent extension of the private market in produce has brought about the existence of capitalist middlemen who arrange transport etc. entirely outside the state distribution sector.

The importance of these phenomena is that they once more illustrate the logic of the degeneration which lays the basis for capitalist restoration. It would be important in this respect to investigate the mode of exchange between the agricultural and industrial sectors of the economy, but suffice it to point out here that the majority of food prices cannot be planned in any sense, unless some sort of subsidisation of food prices is undertaken which is closer to western capitalist agricultural policy than to socialised system of agricultural production.


For Mandel the restoration of capitalism could only be demonstrated by the introduction of layoffs in industry, the appearance of massive unemployment, and a change in the direction of the economy, such that it responds to changes in liquid demand etc.[24]. I have shown above that the last condition is possible, at least at the level of the individual firm, but the central point here is that Mandel’s conception of capitalism is restricted to the abstract model of laisser faire capitalism in which free competition is paramount and the ruling class has a great historical task to accomplish. What I have tried to show in this article is that when we consider the economy from the point of view of the circulation of total social capital alongside the social relations in which production takes place it becomes clear that contradictions exist within the soviet economy which are strictly analogous to those existing in most monopoly capitalist economies. These contradictions can of course become more fully developed as recent evidence suggests. There are also counter tendencies however. For example, a ruling class which relies on self-declared ’Marxist-Leninist’ principles in order to maintain its rule over the masses will at certain points be forced to make concessions e.g. in the area of state provided amenities in defence of its power. It is also probably the case that there are serious divisions within the ruling bloc over the question of the way forward for the Soviet Union. Thus class struggle in the Soviet Union will take a specific form according to the concrete situation; we should not expect it to be identical with that in the West.

Mandel’s article reveals clearly the very shaky foundations on which the Trotskyite critique of the Soviet Union rests. Fundamentally it is based on a form of economic determinism, where the productive forces are given primacy and politics is discounted as purely secondary (in this sense the so called Fourth International has not travelled far when compared to the Second)[25]. The distorted view of the state which accompanies this assessment prevents a concrete analysis of the Soviet Union which bears any relations to reality, and ends in the characterisation of the Soviet Union as a ’non-capitalist’ society.

For Marxist-Leninists on the other hand the key question in the transition to socialism is the maintenance of the dictatorship of the proletariat under the guidance of a Communist Party which retains close links with the masses. Only in this way can control over the means of production and over the state apparatuses be extended and socialist relations of production be established on firm foundations. If these conditions are absent, then the restoration of capitalism will always remain a probability.


[1] Mandel here refers to the debate over capitalist restoration. Published as ’On the Transition to Socialism’. Monthly Review Press. 1971

[2] ”The Soviet Economy Today” in International Socialist Review, July 1972. E Mandel, p.9

[3] Mandel, op.cit. p. II.

[4] For the principal discussions of these problems by Marx & Engels see Selected Works, Lawrence & Wishart, London. 1970 pp. 318-321 (’Critique of the Gotha Programme’) & Engels “Anti-Duhring” Pt. III, ’Socialism’, Lawrence & Wishart, London, 1969.

[5] V.I. Lenin, The Tax in Kind in Selected Works, Vol. 3. Moscow 1971. p. 589. Also on this point the articles ’Economics and Politics in the era of the Dictatorship of the Proletariat & On Cooperation.

[6] ibid.

[7] Cf. the following statement by Lenin: ’Mi’yukov is absolutely right when he says ”If only there is a power shift away from the Bolsheviks, no matter whether it is a little to the left or to the right, the rest will take care of itself” (The Tax in Kind, Selected Works, Vol. Ill, p. 614.)

The point was made very strongly by Lenin against Trotsky, in the 1920s particularly in ’Once More on the Trade Unions’ (S.W. Vol III.p.523).Compare the following statement by Erich Farl in International (Journal of the International Marxist Group) Vol II , No. I. 1973.

’The Chinese theory is therefore a thesis of peaceful coup d’etat a ’palace revolution’. It suffices to take power in the Party and imprint on it a counter revolutionary line and the class nature of the State will automatically change. This thesis has two main characteristics; firstly it allows for a peaceful Transition (gradual or reformist) from one type of state to another; secondly it gives primary emphasis to the political factor (the POLITICS OF THE PARTY) in making an analysis of the class nature of the state”. (p.21, my emphasis)

[8] Mandel,op.cit.p.9.

[9] ibid. p.I3

[10] ’From the moment when society enters into possession of the means of production and uses them in direct association for production, the labour of each individual, however varied its specifically useful character may be, becomes at the start and directly social labour. The quantity of social labour contained in Product need not then be established in a roundabout way; daily experience shows in a direct way how much of it is required on the average ... It is true that even then it will be necessary for society to know how much labour each article of consumption requires for its production. It will have to arrange its plan of production in accordance with its means of production, which include, in particular its labour power. The useful effects of the various articles of consumption, compared with one another and with the quantities of labour required for their production will in the end determine the plan? People will be able to manage everything very simply, without the intervention of a much-vaunted value. ’(Engels, ’Anti-Duhring’, pp. 366-67.)

Engels here is speaking of a fully socialised production process. In the transition period mentioned by Marx in the Gotha Programme the remaining ’bourgeois’ aspect of distribution rests on the maxim ’From each according to his ability to each according to his work’. The movement from one phase to the next cannot be accomplished simply or automatically; it depends on the development of the relations of production (e.g. degree of mass participation in planning and control). Bettelheim has made the point that a concern with ’financial strictness’ in relation to stable prices, and raising the standard of living in a measured manner etc. is not ’fetishism’ concerning the money form but ’stems from respect for the labour furnished by the masses, and for their rights’. (C. Bettelheim & P.M.Sweezy, op.cit., p.23)

[11] See the above quotation from Engels. For a fuller exposition of this point and the question of economic calculation in the transition phase see Bettelheim, ’Calcul Economique et Formes de Propriete’, Maspero. Paris 1971. (Translation forth coming.) This section of the review uses arguments put forward in this book, which is a useful preliminary theoretical study of the nature of transitional forms of economy.

[12] Preobrajensky. ’New Economics’ and ’N.E.P. to Socialism’ Trotsky. ’Whither Russia?’ in International, Vol 11, no. ii, 1973. Stalin, ’Economic Problems of Socialism in the USSR’. Peking, 1972. pp. 13-15.

[13] Bettelheim, C. ’Revolution culturelle et organisation Industrelle on Chine’. Maspero. Paris. 1973. Translation forthcoming.

[14] Mandel, ’On Bureaucracy’ in Red Pamphlet,No. 5. IMG Publications.

[15] The characterisation of the Soviet Union as a ’bureaucratically deformed workers state’ was closely related to the phase of state capitalism described by Lenin, but was accompanied by the demand for a concrete solution to this problem by means of the training of thousands of workers in administration, the point being to gradually correct this deformation through correct action. The immediate aim was thus not to abolish bureaucracy but to transform the bureaucracy, into one closely tied to the service of the people. In Mandel’s schema the bureaucracy remains a stratum, a layer, yet it has succeeded in achieving ’usurpation by the bureaucracy of the economic and political power of the proletariat’ (Mandel. On Bureaucraty’.p31).This usurpation rests on ”privileges’ which ’can develop only within the framework of a non-capitalist (!) mode of production’ (ibid.). This bureaucracy, in addition manages the amazing feat of ’defending the non-capitalist nature of the workers states and at the same time it fears and fights world revolution and thereby undermines the socio-economic basis of the workers state ’ (ibid.). Without examining the characteristics of the modern Soviet state Mandel continues to assert that it is a workers state (presumably workers state which oppresses the workers?) and argues that although the bureaucracy has expropriated the working class that it is not a class because it ’has no political, social or economic means at its disposal to make the defence of its own special material interests coincide with the development of the mode of production from which it draws its privileges’. (The Soviet Economy Today, p. 17) Aside from the astounding terminology and tortuous arguments, the fact remains that classes are defined by the relations of exploitation which stem from relations to the means of production and only an analysis of the structure of the Soviet economy can provide a definition of the relations which hold between Party, managers and dire t producers.

[16] Vosnesensky (Chairman of Gosplan in late forties) ’Voennaia Ekonomika S.S.S.R. (Moscow 1948)” pp” 145-60 (Quoted in M. Dobb ’Soviet Economic Development since 1917. Routledge 19720 p. 333

[17] ibid.

[18] Dobb, op.cit. p. 334

[19] Stalin, op.cit. p.

[20] Dobb, op,cit. p. 334

[21] ibid. p. 381

[22] ibid. p. 392

[23] For an account of this process see Alec Nove, ’An Economic History of the USSR’. Pelican. 1972. pp.363-68 Data on agricultural production taken from M. Mavrakis. ’Du Trotskyisme’. Maspero, Paris. 1973 ed. p. 146 (Translation forthcoming.)

[24] Mandel, op.cit.

[25] More examples can be given from Mandel’s article. In fact his whole approach to the Soviet Union is characterised by his definition of the condition of scarcity; this apparently explains the ’accidental nature’ of its development. This is an approach typical of Trotsky himself. His sole solution to problems presented by the situation of the Soviet Union in the twenties was the faster development of the productive forces. The following quote is of particular interest:

’If world capitalism...should find a new dynamic equilibrium (not for its unstable government combinations) but for its productive forces; if capitalist production in the next few years or decades should experience a new great renaissance; this would put us, the Socialist State in the peculiar position of being obliged -though already engaged in changing from our slow freight train to the faster passenger train -to catch up with a first-class express… this would mean that we were mistaken in our fundamental historical judgments. It would mean that capitalism has not yet exhausted its historic mission’, and that the imperialist phase now unfolding before us does not constitute a phase of capitalist disintegration, of its death struggle, but rather the necessary condition to a new period of efflorescence.’ Trotsky, op.cit. p. 46.