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Frank Demby

The Breakdown of Soviet Planning Under Stalin

(March 1941)

From Labor Action, Vol. 5 No. 9, 3 March 1941, p. 4.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

The recent 18th conference of Stalin’s “Communist” Party indicates that the Stalinist regime is near the end of its rope. Behind the more dramatic expulsions of Litvinoff, as a member, and Madame Molotoff, as an alternate, from Stalin’s Central Committee lurks the lurid self-confessed picture of bureaucratic bankruptcy. All the manipulations of statistics, which long ago became a “class” science in Stalinland – i.e., a propaganda device – cannot hide the fact that the regime totters on the brink of the grave.

“The more honest we are in disclosing our shortcomings, the sooner shall we be able to get rid of them. Stalin daily teaches us this,” said the nonentity, Malenkoff, who delivered the main report, while “the great leader of the peoples, Stalin,” sat on the platform calmly watching his lackeys trying to explain away the awful mess into which his gangster regime has dragged the entire national economy. Hypocrisy knows no limits so far as these cynical grave-diggers of the revolution are concerned. “The regime of dirt, top-heavy bureaucracy, laziness, armchair administration, and chatter-boxes” has resulted, according to Malenkoff, in decreased output, increasing costs and threatened purges in such industries as building materials and lumber, oil, paper, railroad and water transport, aircraft, chemical, munitions, electrical, maritime and fishing. This picture of more or less complete chaos is then dressed up by Voznesensky, chairman of the State Planning Commission, as one of “new Socialist upsurge and further progress.”

From Plan to Plan

“On November, 1, 1940,” reports Pravda (as quoted in the Daily Worker of Feb. 18), “in eight industrial people’s commissariats, 33,000 machine tools stand idle. At 7,629 enterprises, 170,000 electric motors were not mounted. The cement industry last year worked only at 64 per cent of its capacity.” This presumably is an illustration of what Voznesensky means when he says (Sunday Worker, Feb. 23): “However, by no means all enterprises and people’s commissariats have utilized the possibilities for the growth of production created by the edict of the Presidium of the Supreme Soviet of the USSR, dated June 26, 1940.” (This refers to the industrial peonage laws which I described in Labor Action of Feb. 3.)

In spite of the fact that Voznesensky’s report is carefully enveloped in percentages and figures expressed in rubles, and in spite of the omission of certain vital figures, it is possible, on the basis of what is given and what is known about the situation of Soviet economy at the end of the Second Five Year Plan in 1937, to obtain a fairly reliable picture of the extent of the breakdown of Soviet economic planning during the last three years – years of almost constant and perpetual purges, the Soviet-Finnish war and the Hitler-Stalin pact, which has resulted in Soviet economy becoming more and more dependent on German economy The Second Five Year Plan was begun on Jan. 1, 1933, with the fond expectation of “overtaking and outstripping the capitalistic countries” by the end of it, in 1937. One must rub one’s eyes with amazement at the proposal of a Fifteen Year Plan, which emanated from the recent conference, and has for its purpose “outstripping the leading capitalist states in the per capita production of pig iron, steel, fuel, electric power, machinery and other means of production and articles of consumption.” The fact that per capita production in the Soviet Union declined during the last three years and that it admittedly lags way behind production in the advanced capitalist countries (three to four times, according to Voznesensky, and much more in reality) may not disturb the equanimity of Stalin and his hierarchy. But surely the Russian workers and peasants do not feel overjoyed at the prospect of facing 15 more years of Stalin’s rule of promises mixed with forced slavery.

The Third Five Year Plan (1938–1942) was not even mentioned during the year 1938. Except for the fact that it was supposed to be approved by the Council of People’s Commissars by July 1, 1937, one would never know that a Third Five Year Plan was even contemplated. In January 1939, however, it was admitted that “difficulties of reorganization” had delayed the publication of the Third Five Year Plan, but it was nevertheless operating “satisfactorily.” The plan was formally approved at the 17th Congress of the Communist Party in March, 1939. Aside from an oblique reference by Molotoff to the fact that the Third Five Year Plan called for a 100 per cent increase in heavy industry and producers’ goods during the lifetime of the Plan, one could have legitimately questioned the existence of a Third Five Year Plan, even on paper.

After years of constant sacrifice, the promise that Stalin made to the Russian masses that a temporary period of sacrifice would result in the creation of a land of plenty is completely belied by the official figures on national income given by the same Voznesensky. The national income of the USSR was 125,500,000,000 rubles in 1940, or a per capita annual income of about 650 rubles. The national income in 1937, at the end of the Second Five Year Plan, is now officially announced as 96 billion rubles, or a per capita annual income of about 600 rubles. The increase of 29,500,000,000 rubles is thus almost entirely negated by the increase in population, which is a product of Stalin’s expansionist policy and his reactionary social laws, such as virtually making abortions impossible and using the fascist technique of bonuses for large families. But this fails to take into account the purchasing power of the ruble and what has happened to the purchasing power of the ruble during the last three years. The most conservative estimates available indicate that the ruble’s purchasing power has declined by at least half since 1937. This indicates that the average standard of living of the Russian people has declined by at least 46 per cent during the last three years. And since the inequality of income in Russia is notorious, this means that the overwhelming majority of workers and peasants suffered a much greater decline in their standard of living. It is highly probable, therefore, that the standard of living of the Russian workers and peasants today, more than 23 years after the Bolshevik Revolution, is decidedly below that which existed under the Czar and can only be compared with that of the Chinese coolie.

This decline in the standard of living is in sharp contrast to the growth of the productive forces.

Production Lags

When Voznesensky reports that Soviet production is 534 per cent of 1929 production and goes on to make such a terrific hullaballoo about this tremendous increase as compared with the very small increase in production in the United States between 1929 and 1940, it is first necessary to make a few important corrections and then to give the figures the proper interpretation.

In the first place, on the basis of rough estimates which I made for 1929 production in the USSR, production in 1940 was 283 per cent of 1929 – and not 534 per cent In the second place, the decisive portion of this very considerable increase took place during the first and second Five Year Plans – not during the first three years of the third Five Year Plan. The increase during the last three years is only about 15 per cent.

In the third place, production during the first three years of the third Five Year Plan was supposed to have increased by about 60 per cent. It only increased 15 per cent. In other words, the plan, if it exists, has only been fulfilled about 25 per cent so far, and this does not take into account the terrific disproportions in Soviet economy caused by the bureaucratic commands entering into the economy as a result of underfulfillment of certain plans and the drive to overfulfill others.

Fourthly, and most important of all, according to official Stalinist estimates, production at the end of the second Five Year Plan (1937) was estimated to have increased anywhere between 8 and 12 times from the productive levels of 1929. So that, even if we accept as entirely accurate the Stalinist figure of 1940 production as being a little more than five times the 1929 production, the regime stands convicted of a considerable decrease in production.

The crisis in the Soviet economy has reached such proportions that it cannot be concealed. That is the real meaning of Stalin’s 18th Party Congress. And this was only to be expected, for genuine economic planning requires thoroughgoing democratic control of the planned economy by the working population. This, of course, is utterly excluded as long as the totalitarian bureaucracy exists. Correcting mistakes in the plans and flaws in the economy becomes impossible when life is organized on the basis of: Produce according to the dictates of the Kremlin or be shot. The idle boast that the USSR is now independent of capitalist economy is given the lie by the official figures for Soviet production and by the steady efforts made to import machines and machine tools from Germany and the United States. Stalin can only hope to offset the economic crisis, expressed in declining standards of living, declining productivity of labor and the slowing down of the growth of production almost to a standstill, and thus preserve his tottering regime, by engaging in new foreign adventures.

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