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Arne Swabeck

A Crucial Factor in World Politics

The Soviet Challenge To Capitalist Economy

(Spring 1957)

From International Socialist Review, Vol.18 No.2, Spring 1957, pp.41-48, 71.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

THE dynamism of the rapidly advancing Soviet industrial development is gradually dawning upon an incredulous capitalist world. In the military field and in the diplomatic sphere the challenge of Soviet power and effectiveness has long been recognized by leading circles in the capitals of the West. But a challenge on the economic front was, until recently, considered unthinkable.

Ever since the 1917 revolution it had been smugly assumed that whatever else might be true about the Russians, they would always lag behind economically. This idea was fortified, especially in the United States, by the official bourgeois doctrine that capitalist relations of society are incomparably the most productive and a “natural order,” as Adam Smith put it, in which “man’s self-interest is God’s providence.” The validity of this official doctrine seemed borne out during the last fifteen years by the fabulous productivity of American economy and, to a lesser extent, by the recent economic upturn in Western Europe. But these beliefs are now about to be swept into the dustbin of history.

The rise of the Soviet Union to the position of a modern industrial power, second only to the United States, has compelled the capitalists to take another look at all their past perspectives. Industrially the USSR has far outstripped the capitalist countries of Europe. Its tempos of growth are without parallel. And living social forces are now settling the debate about which is more productive – capitalism or the new economic forms established by the Bolshevik revolution. The socialist foundation laid down in the USSR in 1917 has demonstrated its right to victory, not in theory alone, but in terms of steel, coal, electric power and instruments of production.

The Soviet Union now occupies first place among nations in the rate of continuous capital investment in industry. About 25% of its 1955 national income was reinvested as industrial capital, according to a survey of the UN Economic Commission for Europe. For the United States the rate of capital investments, government and private, was about 18% of national income, and this was the highest percentage in the postwar period. According to the ECE, France and Britain ranked lowest in capital investments with a rate of 8% and 6% respectively.

Of course, the high rate of capital accumulation in the Soviet Union has its opposite side of low living standards for the working population. But this we shall discuss later.

A study of Soviet economy in the April, 1956, Lloyd’s Bank Review of London calculates that in 1950 the Soviet Union’s industrial output was 35% of the United States figure. In 1965 it came close to 50%. For the same period the authors estimate that the industrial output of the United States increased by 24%, while that of the Soviet Union made a leap of 75%. Other estimates, for the same period, came to roughly similar conclusions.

At the Twentieth Congress of the Communist Party of the Soviet Union, held in February 1956, Khrushchev claimed a twenty-fold increase of Soviet industrial output since 1929. Of course, in the early stages of industrialization, starting out from a low level, percentage increases will naturally be large. Yet, however exaggerated Khrushchev’s claim may be, the astounding growth is acknowledged from all sides. Moreover, the Soviet achievement stands out more sharply in view of the colossal destruction of industrial plants in World War II. In comparison, American industrial output for the same period (28 years) is variously estimated to be from two and one-half to three times; and not a single American industrial plant suffered damage from the war. So, the discrepancy in the figures, whatever it may be, is of far less importance than the general trend that is indicated.

Consider, for example, the wild gyrations of the American economy since 1929. It took the catastrophic plunge into the Great Depression and went up to the high peaks of war production during World War II and the intervention in the Korean civil war. Since then we have oscillated between relative prosperity,’ artificially stimulated by a gigantic armaments program, and recessions, farm crises and the mounting inflation that has cut the purchasing power of the dollar in half. Compared to this delirious performance the Soviet economy – in which recessions or depressions are not known – presents a picture of robust health and enviable stability.

Labor Productivity

The relative advance of labor productivity affords another means of comparing the two world economic systems. Its supreme importance lies in the fact that labor productivity is the measure of strength of an economic structure. “All economy,” said Marx, “comes down, in the last analysis to an economy of time.” And the function of technique is precisely to increase the productivity of human labor.

But the difficulty of making an exact estimate of labor productivity is commonly recognized. Considerable variations in given industries occur over specific periods, depending on many different factors. And when evaluations of relative productivity levels are extended to a comparison between nations, many more variables are involved. Galenson makes this amply clear in his study of Soviet and American productivity. [1] He traces the development of several specific industries, but direct calculations cover only the pre-war period, with some suggestions of comparative trends up to 1950. Thus the estimated productivity of Soviet labor in 1937-39, for the industries examined, would average out to about 42% of that of American labor. It is worth noting that a contemporary Soviet statement reached approximately the same conclusions.

Galenson calls attention to the decline of Soviet labor productivity due to the destruction of plants and equipment in the war. But the lost ground has been more than recovered, for a 1950 Soviet industrial productivity index indicates a substantial narrowing of the pre-war U.S.-Soviet productivity gap. While Galenson expresses some doubts about this, the editors of Lloyd’s Bank Review estimated that Soviet labor productivity had advanced in 1955 to about 50% of the American rate and might be about the same as the British. And here we enter the most significant aspect of the question – the rate of increase of labor productivity.

For the decade 1928-38 Galenson concludes that Soviet industrial labor productivity rose at a rate, compounded annually, of about 6% a year. Evaluating this against the American experience, he cites Solomon Fabricant’s authoritative conclusion that during the 40 years from 1899 to 1939 the average annual productivity increase in US manufacturing was about 2% per man and, 2.75% per man hour. Thereupon Galenson hazards the guess “that the Soviet productivity increase from 1928 to 1938 has been unmatched.” The rate declined in the 1940-19-50 decade. Included in this period was the effect of destruction of plants and equipment during the war; nevertheless Soviet index figures imply an average rate of productivity growth of about 3% a year. Against this, Galenson cites the 1947 US Census of Manufactures, which indicates an annual rate of productivity increase in US manufacturing of about 1% between 1939 and 1947. The commonly accepted rate of 2.5% for U.S. manufacturing apparently failed to materialize. But Galenson adds that there might .have been an approximate annual productivity increase in American industry of 2% since then, while The Nation’s Business, August 1956 estimates an annual average of 2.9% from 1947 to 1954.

These figures for the US do not seem very impressive when compared to the growth of Soviet labor productivity during the fifth Five Year Plan (1950-55). Although projected targets were admitted to have not been fully attained, with agriculture lagging far behind its goals, Bulganin reported to the Twentieth Congress that in industry productivity rose 44% or an average annual increase compounded of 7.6%. “Indeed,” exclaimed Khrushchev, “higher productivity accounted for more than two-thirds of the total increase of industrial output during the fifth Five Year Plan.”

According to Bulganin and Khrushchev the increase in labor productivity is due solely to the superiority of planned production. Basically this is true. But it does not tell the whole story. Intensified labor, spurred by the bureaucratic whip, became a part of the whole process of industrial growth. It became a part also of the intensified social antagonisms.

Facts or Lies?

But the question has often been asked: “Are Soviet data reliable?” No serious analysis has unearthed outright fabrications. But bureaucratic pressure develops a tendency to embellish the facts, and exaggerate accomplishments. Besides, under the same pressure, statistics for segments of the industry where growth rates are low can be conveniently dropped. Over and against this stands the necessity of maintaining a sufficiently accurate statistical control of measurements of production as well as productivity without which rational planning and allocation of resources, human and material, would prove impossible. And Galenson comments on his examination of Soviet data: “To construct a fabricated system of statistics attaining such a degree of internal consistency would require herculean labor.”

A Columbia University study, made by Dr. Seymour Melman, indicates that the productive efficiency of Soviet industry is going up twice as fast as that of the United States and two to three times as fast as that of Western Europe. The rise of Soviet productive efficiency is estimated at a rate of roughly 6% a year. Dr. Calvin Hoover reaches a similar conclusion in the January Foreign Affairs. It is true that these figures are more conservative than Soviet estimates. Nevertheless the general trend is now clearly established; the rate of growth of both production and of labor productivity is far greater under the socialist type of property forms and state planning than under the most highly developed capitalist economy.

Soviet post-war trade has leaped to almost three times the prewar level. The share of the Soviet bloc countries, including China and Eastern Europe, in total world trade reached about 10% in 1955.

It illustrates one aspect of the growing interdependence of nations in world economy. Even though roughly four-fifths of this trade is carried on within the Soviet bloc, this only serves to point up the severe losses incurred by the imperialist world. And now, while the capitalist embargo against trade with the Soviet bloc is being whittled down gradually, the Soviet Union has embarked on its avowed aim of competitive penetration of the world market. No major trade deals are involved so far; but the potentials are indicated by the stormy growth of Soviet industry. Hence, in Wall Street as well as in Washington, this emerging economic penetration is viewed with ill-disguised apprehension.

In Science, Too

But the imperialists, who once felt so sure of their world supremacy because of the superiority of capitalist industry, have shown even greater apprehension over Soviet progress in science. It is now recognized that since the 1917 revolution the advancement of science and engineering – despite some lamentable instances to the contrary – has been fostered by Soviet planning. “A prodigious effort has been expended on scientific and technical education,” says Allan Dulles, the Director of American Central Intelligence. (US News and World Report, May 11, 1956.) And as one example he cites the fact that in 1955 the Soviet Union graduated 130,000 students in the physical and biological sciences as against 77,000 in the US. For graduates in engineering the comparative figures were 62,000 as against 24,000.

The apprehension of Allan Dulles is shared by former Senator William Benton, who, upon his return from a visit to Russia, cried out in alarm: “The Soviet Union is challenging us fundamentally at what have traditionally been our two strongest points, technology and mass education.” In the New York Times of April 1, 1956, he described his experience at a Moscow bookstore overrun by 15- and 16-year olds, excitedly buying, not comic books or Westerns, but texts of physics, engineering and chemistry. In other words, the interest in science is higher among the Soviet people than among the American.

How does the United States compare? At its last annual meeting the American Association for the Advancement of Science considered an extensive committee report on social aspects of science. “The social environment in the United States,” said the report, “does not elicit a maximum interest in science ... on the part of the public or of those who attempt to judge the public mind for purposes of directing the media of information.” The report complained that agencies which use scientific knowledge (industrial, management, military and medical) encourage scientific research which “seems to promise information that might be useful for their own specific purposes.”

In the Soviet Union, on the other hand, the function of science is closely integrated with the planned social and economic development – including, of course, the military aspect – not, however, to extract maximum profits for private entrepreneurs, but to increase national income. Science advances on a qualitatively new foundation, assuming direct responsibility within the conscious overall social direction and development of the productive forces. This leads to a greater utilization of human intellectual resources, as demonstrated by the ability of planned economy to attract scientists and to generate science.

But the most eloquent testimony to the progress of science in the USSR comes from a group of American scientists who participated in a Moscow conference on high-energy particle physics in May 1956. They reported that the Soviet Union has achieved a lead in pure nuclear research that the United States probably cannot overcome within the next ten years.

Two American physicists, Marshak and Wilson, described in the Scientific American August 1956 the advanced nature of the experiments at the great new physical research center at Bolshaya Volga, near Moscow. “They knocked my eye out,” Wilson said, “... the detectors, counters and electronic circuitry are not the homemade affairs typical of a US laboratory but are beautifully engineered.”

Almost a couple of centuries of painstaking technological research and development in the capitalist world have been absorbed by the Soviet Union in a few decades. At the same time, new and incomparably more effective industrial methods corresponding to planned directives were made possible by concentrating the means of production in the hands of the state. The results achieved reveal the inner powers and resources of the Soviet Union as the material expression of a new and progressive historical tendency. But the grandeur of these achievements underlines all the more heavily the still existing inadequacies.

Cracks and Seams

Comparative indices for the volume of per capita production are far less favorable to the Soviet Union. While the amount of coal produced per inhabitant is only slightly higher in the United States, yet for such basic industrial items as steel and oil, the US per capita figure is almost 3 and 5 times as large respectively. The far greater proportion of the latter figure is due primarily to the shift to oil in the US for industry and transport. And while the most striking expansion has occurred in Soviet production of electric power – a 34-fold increase since 1929 – the US per capita output is still about four and one-half times as large. Per capita annual use of electricity in the US is 3,455 kilowatts compared to 758 in the USSR. However, Soviet production of machine tools, in 1955, exceeded that of the United States, according to Allan Dulles, which would indicate proximity in this vital industry. Moreover, by the end of 1965 – with the completion of the fifth Five Year Plan – Soviet industrial output and labor productivity were only about half that of the United States.

As an explanation in this instance, the time element is an important consideration. It could not be expected that the Soviet Union would attain the US level of technique, either quantitatively or qualitatively, in the brief span of a few decades. The relatively leisurely development in the United States permitted a technically more homogeneous and therefore a more efficient industrial and agricultural structure. It permitted a more harmonious integration of plants and equipment, a higher coordination among factors of production and more adequate means of transportation. Other advantages, not the least of which was access to the resources of the world market, favored the United States.

In contrast the Soviet economy still contains gaping disproportions. The backward and antiquated exist alongside of the most advanced; motive power by draft animals is combined with the latest in nuclear development; and the backwardness of certain branches greatly decreases the useful operation of others. Besides, bureaucratic arbitrariness and mismanagement aggravates all disproportions.

Concerning machinery and equipment Bulganin complains “... we still have many old turning lathes ... the foundry machines ... have only one-third or one-quarter of the productivity of modern automatic and semi-automatic machines ... the level of mechanization is insufficient, and the proportion of hand labor is very high.” And indicating bureaucratic mismanagement, Bulganin adds: “In certain branches of industry production capacity is by no means being used to the full.”

Means of transportation are altogether insufficient. The Soviet railway system has only about one-third the American total of 370,000 miles of tracks. And “... It must be admitted,” says Khrushchev, “that railway transport is lagging behind technically. In the main, steam locomotives are used, although it is a well known fact that the efficiency of steam traction is low ... only 2,267 kilometers of railway, or 58% of the five-year target, were electrified in the course of the last five years.”

Turning to the problem of freight haulage by roads, Khrushchev hints at some more bureaucratic mismanagement. He points an accusing finger at the “unbe-lieveable lack of centralization. A vast number of dwarf organizations have sprung up,” says Khrushchev, “to which many heads of plants and institutions cling. Suffice it to say that 85 per cent of these organizations have ten vehicles or less.”

But the disproportion between industry and agriculture presents a far more serious problem. Agriculture has consistently been the weakest element in Soviet economy, a fact now officially admitted. Its traditional backwardness, the past disasters of forced collectivization, and the recurrent peasant passive resistance, are all well known. Even today crop yields per hectare are far less than in advanced European and American farm areas. As a result food and industrial crops have remained in short supply.

It is true that soil conditions, rainfall, temperature and other climatic factors are generally less favorable in the USSR. In addition there is inadequate irrigation, commercial fertilizers, buildings and equipment for livestock, not to mention the lack of rural electrification, all of which require large capital investments. Even more detrimental has been the long-standing Kremlin policy of favoring the development of industry at the expense of agriculture. This has meant lack of machinery for the collectives and lack of manufactured goods for the countryside with the consequent fostering of individualistic tendencies among the peasants who favor their midget plots to make a livelihood. As a result, output per farm laborer has remained relatively low. In rough terms it requires one farm worker to supply four persons in the USSR, compared with one farm worker for every sixteen persons in the United States. These were the conditions that prompted Khrushchev to admit at the Twentieth Congress that the Central Committee “has brought to light serious shortcomings and mistakes in the guidance of agriculture ...” Guidance by whom if not by the bureaucracy ? Acknowledging the importance of grain farming as the foundation of agriculture, Khrushchev was compelled to admit further:

“The outcome of all this was that in 1953, when the requirements in grain had risen greatly in comparison with the pre-revolutionary years, the area under grain was almost the same as in 1913.”

Considerable improvements have been claimed for 1956. The harvest is reported to be the largest in the history of Russia. Unfortunately one year’s crop, even a bumper crop, is not yet decisive for future perspectives. Least of all can it decide the ultimate success or failure of the presently extended cultivation of the semi-arid, “virgin and fallow lands” of Central Asia and West Siberia.

The Sixth Plan

The sixth Five Year Plan aims to overcome some of the more glaring disproportions in the Soviet economic structure; it also aims at a more permanent solution of the farm problem. State capital investment in agriculture is to be nearly double the amount of the preceding plan – approximately 120 billion rubles. Collective farms are expected to invest an additional 100 billion out of their own resources. The goal is to increase agricultural production approximately 70%. This is to be achieved, according to Khrushchev, by going over from mechanization of separate jobs to the comprehensive mechanization of all agricultural production, animal husbandry included. Industry is to supply new farm machinery for the five-year period in quantities approaching the total of all previous deliveries. A big increase in the supply of mineral fertilizers is promised, along with extended irrigation and expanded rural electrification. Coupled with more advanced farm technique and crop specialization, these measures, we are told, will assure the projected increase of both farm production and farm productivity.

But the sixth Five Year Plan continues the previous emphasis on the construction of heavy industry. It calls for an overall increase of production of approximately 65%. Of this projected total gain, capital goods production is earmarked to increase in the five-year period by approximately 70%, and consumer goods production by approximately 60%. However, some revisions of these plan targets already point to a cut-back in capital investment in industry. These revisions arise out of the great pressure for more consumer goods and especially for more housing.

Total projected state capital investment for the entire economy is 990 billion rubles or more than the combined amount of the two preceding plans. In comparison, the first Five Year Plan that began in 1928 was financed by a modest 58 billion rubles.

A few examples will illustrate graphically the plans for the present five-year period. The goal for electric power is an increase of 88% and for electric power per industrial worker more than 60%. The directives call for the construction of several atomic power plants with an aggregate capacity of 2 to 2.5 million kilowatts; a greater total capacity than those contemplated, for the same period, in the United States and Britain combined. Even more notable is the attention given to the problem of improving industrial technique.

The sixth Five Year Plan calls for the introduction of automatic processes in the metallurgical, extractive, machine-building, electrotechnical, chemical and construction industries, as well as a member of consumer goods industries. In the machine-building industries alone, it is proposed to put into operation some 220 automatic and semi-automatic production lines and shops. On the whole, the production goal for all such equipment is a five-fold increase. Moreover, projected strides in technique such as these, permitting a more rhythmic operation of plants, are visualized as the basis for a projected labor productivity increase in industry of approximately 50%.

Thus the Soviet system not only allows for a speedier development of the productive forces, but tends to revolutionize the productive processes, to permit technological advances at tempos unattainable by capitalism. From this follows, as a primary feature of planned directives, the qualitative extension to more efficient processes and work methods.

The principal economic aim, as expressed in the sixth Five Year Plan, is “to overtake and outstrip the most advanced capitalist countries in per capita production.” An entirely correct and worthy objective, corresponding to the needs and aspirations of the Soviet workers. However, the task of catching up is still far from realization, all the bureaucratic boasting about the triumph of socialism and the transition to communism notwithstanding.

“Socialism,” said Trotsky, “could not be justified by the abolition of exploitation alone; it must guarantee to society a higher economy of time than is guaranteed by capitalism.” And Trotsky added the words that are as true today as when they were written:

“In that sense, decisive for all civilization, socialism has not yet triumphed. It has shown that it can and should triumph. But it has not yet triumphed. All assertions to the contrary are the fruit of ignorance and charlatanism.” (Revolution Betrayed, pp.78-79.)

What About the Workers?

To what extent have the workers of the Soviet Union benefited from the giant strides in economic growth? No analysis of the progress made can afford to minimize the decisive importance of this question, especially when it is considered in terms of progress toward socialism. After all, socialism concerns not only economic development, it is a question also of human relations.

National income in 1955 was more than 14 times that of 1928, according to the new statistical abstract, now published in Moscow. During the same period in the United States real national income roughly doubled. In this case also percentage increases in the USSR would naturally be much higher due to mass production of goods previously imported or manufactured in antiquated ways. But a comparison of living standards gives us an entirely different picture. In the first place a disproportionate share of national income was devoted to capital investment in industry and technique. The swarm of bureaucratic locusts devoured a huge part. Another large share went into monuments, public edifices, Soviet palaces and institutions of learning – of which the new Moscow University is rated the greatest, the most imposing and the best equipped educational structure in the world – and into ornate projects such as the Leningrad and Moscow subways and even luxurious sanatoriums – mostly temples of rest for the upper layers of Soviet society. A large share went into armaments for defense. Obviously, only a minor fraction of the steeply rising national income was devoted to the elevation of the living standard of the workers.

Reporting to the Twentieth Congress on the material and cultural needs of the people, Khrushchev admitted, “... we must say that we do not yet have an adequate quantity of consumer goods, that there is a shortage of housing, and that many important problems connected with raising the people’s living standard have not yet been solved ... the speed of house building seriously lags behind the development of our national economy and the growth of towns and industrial centers. Besides, many ‘ministries and other bodies regularly fail to carry out their housing programs.” Bulganin calls the housing shortage acute. And all objective observers, agree that despite the huge efforts in house building, particularly for the upper layers of Soviet society, these have not kept up with the immense growth in urban population. Workers’ living quarters remain wretched and terribly overcrowded.

The Greatest Disproportion

The general rise in culture in the Soviet Union cannot be disputed. Yet it is true, that since its inception state planning has conceded only second place to the people’s needs. Consumer goods are still in short supply and poor in quality. As a result the dismally low working-class standard of living stands out as the greatest disproportion in Soviet economy. Planning in the hands of the bureaucratic oligarchy has displayed elements of the cynically raw disregard for the most precious component of all capital – human labor power – that was characteristic of the capitalist Industrial Revolution of the eighteenth and nineteenth centuries.

While the brutal police repressions of Stalin’s time have now markedly eased, immense material and cultural inequalities still remain. Distribution of life’s goods still takes place on the basis of the capitalistic measure of value. Their trade unions devitalized and workers councils liquidated, workers have been deprived of any sense of ownership in the nationalized means of production, of any voice in planning, in management, in allocation of resources and in division of national income.

The growth of privileged social layers has been spurred at the cost of the immense majority. In many cases the members of these privileged layers receive monetary rewards at rates twenty times as high as those of factory workers. Such are some of the effects of the bureaucratic regime which still remains the most serious barrier on the road to socialism. Progress toward socialism demands democracy for the producers and consumers as an absolute prerequisite for the free flowering of creative initiative and sense of social responsibility.

But it is not possible to accept either the social-democratic or directly bourgeois-inspired versions of the condition of the Soviet workers; these reflect primarily an anti-Soviet bias. One such example – ridiculous to be sure – offered in the US World Report, September 21, 1956, informs us that the new minimum monthly wage in the USSR will buy: one pair of men’s leather shoes and one pair of socks. The question this fails to answer is: how do the Russian workers manage to eat? Another example is the charge made in the New Leader supplement, December 24-31, 1956, that “Soviet labor’s real wages at the end of 1952 ... [were] still below the 1928 standard.”

No facts are supplied to support these misrepresentations, because none can be found. An entirely different conclusion appears in the analysis made in Foreign Affairs by Dr. Calvin Hoover. Comparing observations and studies made on visits to the Soviet Union in 1939 and 1956, his estimate is that “real wages of urban workers increased by somewhat less than 40% over the last 17 years.” He warns that this should not be regarded as a statistical conclusion; but he discounts the higher Soviet claims. Hoover adds that “average real hourly earnings of workers in manufacturing industries in the United States, during the same period, increased by nearly 50%.” The latter estimate may appear somewhat high to American workers. However this may be, the fact is that whatever was gained was due, not to the generosity of Big Business, but to the workers’ own massive organization of industrial unions.

Presumably the estimate of Soviet real wages takes into account the substantial number of social services available to the workers. There is free medical care, day nurseries for children of working mothers, payment during maternity periods, free vacations at rest homes, sick benefits, pensions, etc. Khrushchev reports that during the fifth Five Year Plan the state spent a total of 689 billion rubles for these social services, including education. But even so, it is a known fact that the standard of living of the workers in the Soviet Union still remains comparatively low.

The sixth Five Year Plan projects an increase in real wages for Soviet workers of approximately 30% over the five-year period. Income of collective farmers, in cash and kind, is to increase by approximately 40%. The workers are promised a shorter work week (seven-hour day, six-day week) at no reduction in pay, beginning in 1957. At the same time, all tuition fees in higher educational institutions are to be abolished.

A fundamental revision of the existing wage structure is to be an integral part of these efforts; it has in fact been under way for some time. But the revision is designed principally to bring wages and output more closely into line with technical efficiency already achieved. Bulganin stated this rather delicately in his demand of “bringing order into the wage rate system in industry and clearing the way for mass scale introduction of technically substantiated output quotas.”

In the struggle to raise labor productivity the Stalinist bureaucracy introduced the most crude and naked forms of inequalities. The piecework system and bonuses and premiums for greater output, on the one side and penalties on the other, were used as speed-up incentives. Stakhanovists and other shock workers, technicians and managers were the main beneficiaries, and they became a part of the more privileged social layers. The average workers on the other hand were underpaid. But the increasing inequalities collided with the growing socialist elements in the economy. The intensification of labor tended to keep the basic wage at a low level. Administrative speed-up of shock brigades became a disorganizing factor and elemental worker resistance against the sharp differentiations affected adversely the general level of labor productivity. At the same time, the constantly increasing proportion of the labor force drawing bonuses and premium pay, tended to increase the cost of labor. And owing to all these features, the wage system has become increasingly anachronistic.

To keep rising labor productivity in step with the technological advances, a greater equalization of wages has now become mandatory. But the workers, who have good reason for distrusting the bureaucracy, have already given one indication of their fear that wage revisions are to be carried out at their expense, by the sit-down strike last year at the Kaganovich ballbearing plant. On the other hand, a reduction of the bonuses and premiums given the more privileged layers would tend to bring into question the privileges of the bureaucracy itself. This is the dilemma. Khrushchev proclaimed its solution to be “the socialist principle of payment according to the work performed.” It would have been more appropriate to justify this method of payment by reference to necessity. To declare it to be a principle of socialism is, as Trotsky said, “to trample the idea of a new and higher culture in the familiar filth of capitalism.” (Revolution Betrayed, p.82)

The truth is that the character of the wage system in the Soviet Union – based predominantly on piecework payment – is still much more capitalist than socialist. The prevailing level of productivity and the level of per-capita production is still below the highest capitalist standard. These are some of the most forceful indications of the actual state of development of Soviet society. It is still a society in transition from capitalism to socialism. And real progress toward socialism will be measured, above all, by the degree to which inequalities disappear.

The evolution of Soviet society remains internally determined by the conflict between the ruling bureaucratic caste and the needs and interests of the Soviet masses. This is also its major contradiction. Its great advances were achieved despite the obstacle of a bureaucratic regime. Conversely, the greater the advances, the more clearly is revealed the role of the bureaucracy as a brake on the harmonious growth of the productive forces.

The New Tendency

During the earlier Five Year Plans, millions of peasant recruits were brought into industry; they tackled machinery with barbarian clumsiness. Because of the unprecedented tempo of its formation, and the lack of skill and experience, the Soviet working class was then less homogeneous than any other in modern times. Against the background of defeats of the working class on the international arena, these conditions provided the most potent lever for the power and sway of the bureaucracy. But the effects of this lever are now in process of being turned into their opposite. The working class has grown numerically, and it has undergone a qualitative change. New additions to the industrial labor force come now mainly from the urban centers. The former peasant recruits have become proletarianized; and in this decisive sense the working class is more homogeneous. It has acquired skill and experience. By this changed status its former fragmentation has become converted into social coherence and unity.

Being determines consciousness. And being – in this case the unexampled advance of the material forces of production in the USSR – is decisive in imparting to the working class greater self-confidence and socialist consciousness. Out of the bitter experience of Stalinist repression, the Soviet workers are arming themselves with new and higher ideas and methods of struggle. Fear of imperialist encirclement has been largely dissipated by the growing strength of the Soviet Union and by the colonial revolutionary successes. All these factors taken together herald the birth of a new tendency emerging out of the womb of the prevailing order of things. This new tendency has manifested itself, on the one hand, in the actual and genuine concessions that the mass pressure has compelled the bureaucracy to grant. On the other hand, it has manifested itself in in the power and determination of the working-class movements in the Soviet zone of Eastern Europe, culminating in the Hungarian revolution. In both instances the workers proved to be the decisive social factor, demonstrating their devotion to the system of nationalized economy alongside of bitter hatred of the ruling bureaucratic caste.

The birth of this new tendency opens a higher stage in the dialectical development of the historical process in the Soviet Union. As the Soviet working class progresses and the economical backwardness is overcome, the very basis upon which the bureaucracy grew and arrogated its powers and privileges is undermined. The bureaucracy is compelled to retreat and grant concessions. Each concession strengthens the working class. At the same time the bureaucratic privileges collide ever more sharply with the interests and the needs of the masses. These opposites interpenetrate in their mutual conflict. Free Labor is incompatible with a bureaucratic regime; and a bureaucratic regime cannot tolerate free labor. This is the essence of the crisis of Stalinism. And it is in terms of these new conditions that the struggle against the hated bureaucracy will unfold.

The dynamic growth of the Soviet productive forces is conclusive testimony to the historically progressive character of the socialist type of property relations established by the 1917 revolution. But the Stalinist bureaucracy, which usurped political power, constitutes a parasitic growth upon the progressive foundation. It is the main force of degeneracy in the workers state; a consequence of the isolation of the Soviet Union and the inheritance of backwardness; a feature that is in sharp contradiction to the historical future that is clearly implied by Soviet economic developments today.

Improvements in material conditions already won by the toiling masses do not reconcile them to the bureaucratic regime, but on the contrary, prepare the conditions for open conflict. The social forces which have been set into motion by recent events in the Soviet Union, and which have extended into Eastern Europe, must inexorably tend, as already indicated, to resolve the contradictory tendencies through the overthrow of the Stalinist bureaucracy. In other words, through political revolution. Restoration of workers rule and a corresponding high order of Soviet democracy will bring the political superstructure into harmony with its historically progressive foundation.

The crisis of Stalinism unfolds parallel to the crisis of world capitalism. But the latter grows out of an entirely different material foundation; it is an expression of the process of decomposition that has become part of the system. Capitalist decay derives not from a lack of productive forces but from the fact that its productive forces have outgrown private property relations and the barriers of artificial national boundaries. Concurrently with the decline and decay of the capitalist system, the conditions mature for the socialist revolution. But the growing world interdependence of nations is reflected also in the living social forces. The rebirth of Soviet democracy will tumble the barriers between the Soviet masses and the Western workers and fuse the delayed proletarian revolution in the West with its beginning in the Soviet Union.



1. Labor Productivity in Soviet and American Industry – A Research Study by the Rand Corporation, Columbia University Press, 1955.

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