A – Overview

I – The Approach

In this study of Russian industrialization, 1928-1941, a period encompassing the First and Second Five Year Plans and that part of the Third Plan which preceded the present war, my fundamental purpose is to analyze the direction in which Russian economy has proceeded during that period. Is the direction of its growth – the preponderance of means of production over means of consumption, the high organic composition of capital and the rapid deterioration of the living standards of the masses – merely an accidental tendency, or is it the inevitable consequence of the law of motion of its economy?

First of all it is necessary to analyze the progress of Russian economy during the entire period covered by this study. I’m not concerned primarily, however, with a mere statistical measurement of this development because the degree to which the goals established under the plans were or were not achieved have no direct relevance to my thesis. But so extravagant has been the publicity which the proponents of the Soviet have given these data that the view is widely held that the allegedly phenomenal rate of industrial growth in Russia is the criterion of a unique form of economy. Therefore, in order to clear the decks for a basic approach to the subject, it is necessary to deal with this contention.

Russian economists refer to the purported 650 per cent in-crease in the value of all industrial production from 1928 to 1938 as a phenomenon that could not be surpassed, or even matched, except under socialism. They point with pride to that record as one far exceeding the accomplishments of the great capitalist nations in their palmiest days: the highest in-crease of industrial production in England was 29 per cent for the decade 1860-70 and for the United States it was 120 per cent for the decade 1880-90. It should be obvious, how-ever, that the rate of economic development of a nation inevitably depends upon a number of circumstances (1) The level world-wide technological development when the nation embarks on industrialization. Russia in 1928 need not await the tedious process of discovery and invention, as did other nations at the dawn of the industrial revolution, but could draw upon the accumulation of centuries of industrial capitalism; (2) the extent of the natural resources available to the nation. Russia, one of the most favored of all lands in natural re-sources, containing in its borders all the essential materials of industry, is at a decided advantage compared to the nations less well favored by nature, as, for example, Japan; (3) the base from which the achievements are calculated. Clearly, it is easier to attain an annual rate of increase of 100 per cent when the base is one automobile or fifty than when it is one million or fifty million. Furthermore, the sheer bulk of capital goods in an advanced industrial society impedes the rate of technological progress because of the enormous expense and difficulty of replacing obsolete equipment; and (4) the measure of control which may be exerted over the component parts of the economy.

Russian statisticians and their apologists have a “preferred” method of proving Russia’s unprecedented rate of development: they use as their base the year 1929 – on one hand, the year of world prosperity, preceding the depression and, on the other hand, the first year of the Five Year Plan when the Soviet Union had just regained the pre-war levels of production. Thus they more easily can show a sharp upward trend in Russian production and an equally sharp decline in world production.

Presumably, it was because Japan was not among the highly industrialized nations that Russian statisticians, who so impartially compared the Russian growth to that of the advanced nations of the capitalist world, did not include “feudal” Japan in their comparison. We must, however, pause here and note that not only “socialist” Russia but also “feudal” Japan showed a tremendous rate of growth during that period. If we take a comparable period of development, say 1932-37, we find that the total value of the output of Soviet heavy industry was 23.2 billion rubles in 1932 and 55.2 billion in 1937, the value at the end of the Second Five Year Plan thus being 238 per cent of that in 1932.

Japan, also passing to a more rationalized economy, had an index of 97.9 for heavy industry in 1932 and 170.8 in 1937, or 176 per cent of the 1932 figure. Moreover, Japan, poor in materials of industry, was compelled to travel long distances to import 85 per cent of its iron ore and 90 per cent of its crude .oil and was far short of being self-sustaining in copper, lead, zinc, tin and other essential industrial metals. Further-more, were we to take Japan’s high point of industrialization[Measurements of growth by value of output is, of course, an entirely spurious method, although, for reasons best known to themselves, very common-place with Soviet statisticians. Since later sections treat the subject of the inflated ruble at length. I shall leave criticism of this method aside for the moment], August, 1940, as the criterion, we would see that Japan had achieved a 253.5 per cent growth in the means of production, as compared to the index of 1931-33. Such a comparison then robs much from the contention that the rate of growth in Russia is either completely unprecedented or evidence of “socialism.” In and by itself the rate of economic growth in Soviet Russia, as compared with rates of economic growth under other forms of economy, is not of definitive importance. To a Marxist the criterion of transcendent importance in investigating the nature of an economy is the intrinsic law of motion of the economy. With that criterion as our guide, let us re-view the achievements of Soviet industrialization.

II – A Statistical Abstract of the USSR

The only available index of total production in the USSR is that of the ruble value of all industrial output. Although the value of the ruble is fixed by the Soviet State bank at 19 cents ($1.00 equals five rubles and thirty kopeks), it is utterly useless as an index of production or purchasing power in the internal economy. (See section on turnover tax in next installment.) Neither has it any value on the international market.

An index of total industrial production which carefully weights each element in the economy in order to arrive at a statistically valid index of the volume of production, has never been prepared by the Russian economists. This task, never easy under ordinary circumstances, is especially difficult in the case of Soviet statistics, which are concealed or perverted to prove the correctness of “the general line.” Under these circumstances the best available gauge is that of comparing physical output of selected sections of both heavy and light industry as well as agricultural production, against a background of statistics on population and national income. Below is an abstract of the USSR prepared by me to illustrate the course of development of the whole economy from Czarist times through 1940. Figures for the year 1922 have been included in order to show the accelerated pace of the growth of production from the year of ruin following the end of counter-revolution and famine to the eve of the First Five Year Plan. All data are from official state documents in the original Russian: 1913, 1922 and 1928 figures fromGosplan: State Planning Commission for the Development of the National Economy of the USSR: The Five Year Plan; 1932 and 1937 figures fromGosplan: Results (of respective plans); 1940 figures from re-ports to the eighteenth conference of the Russian Communist Party, appearing in Pravda, February 18-21, 1941:


HEAVY INDUSTRY Unit 1913 1922 1928 1932 1937 1940
Electricity Billion kilowatt hours 1.9 1.0 5.0 13.0 36.4 39.6*
Coal million tons 28.9 11.0 35.4 65.4 127.9 164.6
Petroleum million tons 9.3 5.0 11.7 21.3 30.4 38.0
Pig iron million tons 4.2 3.3 6.2 14.5 14.9
Steel million tons 4.2 4.0 5.9 17.7 18.4
Metal working lathes Thousands 1.5 3.8 18.1 36.1 53.9*
Tractors Thousands 0.0 0.0 1.3 51.6 80.0 176.0
Combines Thousands 0.0 0.0 0.0 10.0 43.9
Length Thousand kilometers 59.0 71.0 77.0 83.4 84.9 93.
Freight Traffic million tons 132.4 58.0 156.2 267.9 517.3 536.6
LIGHT INDUSTRY Unit 1913 1922 1928 1932 1937 1940
Cottons million meters 2224.0 0.6 2742.0 2417.0 3447.0 3491.0
Woolens million Meters 95.0 22.0 96.6 88.7 108.3 114.0
Linen million square meters 219.0 93.0 165.0 135.0 285.2 272.2
Paper Thousand tons 197.0 284.5 479.0 831.6 834.0
Sugar Thousand tons 1290.0 211.0 1340.0 828.2 2421.0 2530.0
Leather footwear million pairs 60.0 29.6 60.0 84.7 164.3
AGRICULTURE AND LIVESTOCK Unit 1913 1922 1928 1932 1937 1940
Total area sown million hectares 105.0 77.7 112.9 134.4 135.3 141.2
Amount grain harvested million quintals 801.0 503.1 733.2 698.7 12.2.9
Yield of crop Per hectare 805 7.6 7.9 7.0 10.4
Horses million Heads 35.8 24.1 35.9 19.6 16.7 17.5
Cattle million heads 60.6 45.8 70.5 40.7 57.0 64.6
Sheep and Goats million heads 121.2 91.1 146.7 52.0 81.3 111.6**
Pigs million heads 20.9 12.1 26.0 11.6 22.8 32.5**
POPULATION AND NATIONAL INCOME Unit 1913 1922 1928 1932 1937 1940
Population, of which: millions 139.3 133.3 152.3 165.7   170.5**
Worker and Employees
millions 11.2 11.5 22.8 27.0 30.4
National Income, of which Rubles, per capita 52.0 56.0 95.0 198.0
Nominal Wages Rubles, per week 6.0 14.0 78.0****
Real Weekly Wages In Percentage to 1913: 
125.0 62.4
*1988 figure; **1939 figure; ***approximate, computed from 18th party conference report.

There is one other factor in the development of the Russian economy – a most essential effect of its evolution – to be the considered and which the Abstract did not deal with: the relationship between the production of means of production and the production of the means of consumption. Since it is purely for the purpose of contrast and the same basis is used in both instances, the estimates may be made in terms of rubles. The value of gross industrial production (in billions of rubles, fixed 1926-27 prices) reveals the following proportional development between the means of production (Group A) to the means of consumption (Group B) since the initiation of the First Five Year Plan:

1928 1932 1937 1940
Value Pct Value Pct Value Pct Value Pct
Group A 7.0 44.3 23.2 52.3 55.2 57.5 83.9 61.0
Group B 8.7 55.7 20.3 46.7 40.3 42.5 53.6 39.0

Here we note a phenomenon characteristic of the whole contemporary world: the preponderance of the means of production over means of consumption.

Was the manner in which the economy developed bureaucratically desired? Was a different course open to it? In order to be able to answer these questions and fully to understand the Abstract, it is necessary to analyze the data in the Abstract, not so much from the point of view of mere volumetric in-crease, but, again, from the perspective of the law of motion of the economy. The volumetric comparisons will be considered only because they offer a clearer view of the direction in which the economic structure was evolving. With this as our perspective, we turn to an analysis of the individual Plans.

III – Plans and Accomplishments

1 – First Five Year Plan, 1928-32

The Gosplan brazenly proclaimed, whilst a famine was raging in the country, that the First Five Year Plan was 93.7 per cent fulfilled – just that precisely 93.7 per cent. That much publicized figure was based upon the value, and not upon the volume of production, and furthermore was derived in the following manner: (1) by using the worthless standard of the inflated ruble to measure the value of industrial output; and (2) by vulgarly computing an “average” between the “103 per cent” overfulfillment of Group A to the “89 per cent” fulfillment of Group B industries. There is, of course, no doubt whatsoever about the tremendous strides made in heavy industry during that period but in no case doe’s the value of output present a true picture of industrial production, as can be seen from the following table of actual physical output of major items of heavy and light industry:

MEANS OF PRODUCTION Unit Planned Accomplished Pct.
Electrification million kilowatt hours 22.0 13.1 59.5
Petroleum million tons 22.0 21.3 96.8
Coal million tons 75.0 65.4 87.2
Iron million tons 10.0 6.2 62.0
Steel million tons 10.4 5.9 56.7
Tractors Thousands 55.0 51.6 93.8
Length of rrds. Thousand kilometers 90.0 83.4 92.7
MEANS OF CONSUMPTION Unit Planned Accomplished Pct.
Cotton materials million meters 4700.0 2417.0 51.4
Woolens million meters 270.0 88.7 32.8
Linen million square meters 500.0 135.7 27.1
Paper Thousand tons 900.0 491.2 54.6
Sugar Thousand tons 2600.0 828.2 31.9
Leather footwear million pairs 145.0 84.1 58.4
Rubbers million pairs 75.0 64.8 86.4

As we can see from the above table, the actual production, based on volume, is far short of the 93.7 claimed as accomplished, based on the value of production. Even the percentages of accomplishment in the above table, however, are an overestimate because, although we have changed the basis from value to physical output, we still have retained the Soviet method of including the level of past production as part of the present accomplishment. [The credit taken for past performance is particularly ludicrous in the in-stance of the railroads. This was the only item which, for the year of ruin, 1922, revealed a tremendous growth. This was due to the effective work of Trotsky, who was charged with responsibility for restoring railroad transportation. Cf. Part Two, section on trade union dispute.]To illustrate what we mean, let us take the example of what happened to the railroads. Seventy-seven thousand kilometers of railroads were in operation in 1928 and ninety thousand were planned for the end of the First Five Year Plan. Actually, 83.4 thousand kilometers were in operation in 1932. Since the seventy-seven thousand kilometers in operation before the plan was included in the “accomplishment,” the plan was “92.7 per cent” completed. Obviously there is something wrong with a method that considers performance before the Plan as part of the accomplishment under the Plan. The correct method of computation is to determine the percentage of actual increase to planned in-crease for the years covered by the Plan, and none other. The planned increase is thirteen thousand kilometers, of which only 6.4 thousand were actually laid. Thus the Plan regarding the railroads was 49 per cent, not 92.7 per cent, accomplished. Carrying this method through, we find the following to be the true percentages of actual increase compared to the planned increase:

MEANS OF PRODUCTION Unit 1928 Level Planned Incr. Accd. Incr. Pct. Accd.
Electricity Billion kilowatt hours 5.0 17.0 8.1 47.6
Petroleum million tons 11.7 10.3 9.6 93.2
Coal million tons 35.4 39.6 30.0 75.7
Iron million tons 3.3 6.7 2.9 43.3
Steel million tons 4.0 6.4 1.9 29.7
Tractors Thousands 1.3 53.7 50.3 93.7
Length of rrds. Thousand kmts. 77.0 13.0 6.4 49.0
MEANS OF CONSUMPTION Unit 1928 Level Planned Incr. Accd Incr. Pct. Accd. Pct. Decr.
Cottons million meters 2742.0 1958.0 -325.0 -11.8
Woolens million meters 96.6 173.4 – 7.9 -8.2
Linen million square meters 165.0 335.0 -29.3 -27.9
Paper Thousand tons 284.5 615.5 206.7 33.6
Sugar Thousand tons 1340.0 1260.0 -521.8 -39
Leather footwear million pairs 60.0 85.0 24.7 29.0
Rubbers million pairs 37.0 38.0 37.8 73.2

The above tables are a true balance sheet of the accomplishments of the First Five Year Plan. Particularly poignant is the record of how the production of means of consumption not only failed to meet its goals, not only showed no increase in production, but starkly reveals a decrease from even the 1928 levels. Moreover, the annual curve of production reveals that light industry was progressively deteriorating:

1928 1929 1930 1931 1932
Cotton, million meters 2742.0 3068.0 2351.0 2272.0 2417.0
Woolens, million meters 93.2 100.6 114.5 107.9 88.7

It should also be remembered that neither the annual curve nor the percentage of fulfillment takes cognizance of the extremely large amount of “defectives,” admitted to be as high as 30 per cent in many instances. Although disposed of as trash, they are nevertheless quantitatively counted toward the “fulfillment” of the Plan.

The best proof of the worthlessness of the standard of value output is that it not only fails to reveal the downward curve, but, by inflation, makes the reverse seem true. Thus the gross output of articles of consumption is valued as follows (in billions of rubles):

1928 1929 1930 1931 1932
8.7 10.8 12.5 14.9 16.3

Needless to say, the drastic slaughter of livestock (greater than the decrease due to war, revolution, civil war and famine in 1914-20) was likewise not taken into account in arriving at the glorious “93.7 per cent” completion of the Plan. After all, the decrease in livestock was no part” of the Plan.

Neither was it part of the Plan – and this is of the essence of things – to achieve the relationship of production of means of production to articles of mass consumption which resulted. As a mater of fact, the bureaucracy had planned an increase in production of articles of mass consumption. However, the manner in which heavy industry developed forced a different course upon the economy. For instance, 4.4 billion rubles was planned as capital investment in the production of means of consumption. However, only 3.5 billions was expended. This failure is even greater than appears on the surface because, in the intervening years, 1928-32, the ruble experienced further inflation. For the moment we leave that feature aside in order that our attention will not be diverted from the actual course of the development of the means of production. There was the necessity of producing machinery with the most modern technique. The low productivity of Russian labor conflicted with the high productivity of international labor. Consequently, the reality of the world market and world prices constantly forced the state to increase the amount of capital in-vestments going into the production of means of production. At the end of the period, planned capital investments for this end, which were to have been 14.7 billion rubles and were to have achieved a “balance” between the production of means of production and that of means of consumption, were actually 21.3 billion rubles, with a concomitant reduction in capital investments in the production of means of consumption. This resulted in a complete reversal in the planned relation-ship between Group A and Group B industries. This relationship was to be further aggravated by the progress of the Second Plan, although the announced purpose of the Plan was “to achieve a yet better improvement in the living standards of the masses.”

2 – The Second Five Year Plan, 1932-37

In the final year of the Second Five Year Plan, the con-trolled press published no announcement from the Gosplan in regard to the state of completion of the Plan. The press was busy in describing in glowing language the witch-hunt the state was staging; the infamous Moscow Frame-up Trials. It took two years for the Gosplan to regain its voice. In 1939 it pronounced the Second Five Year Plan to have been successfully – and timely – accomplished. The “timely” referred to the year 1937, although no explanation was made of the overly-belated pronouncement. Let us scan the results, comparing the actual with the planned increase:

MEANS OF PRODUCTION Unit 1932 Level Planned Incr. Accd. Incr. Pct. Accd.
Electricity million kilowatt hours 13.0 25.0 23.4 93.6
Petroleum million tons 21.3 26.2 9.1 34.7
Coal million tons 65.4 87.1 62.5 71.8
Iron million tons 6.2 11.8 8.3 70.3
Steel million tons 5.9 13.1 11.8 90.0
Combines Thousands 10.0 240.0 190.0 79.2
Tractors Thousands 51.6 124.8 115.1 92.2
Length of rrds. Thousand kmts. 83.4 10.4 1.5 14.4
MEANS OF CONSUMPTION Unit 1932 Level Planned Incr. Accd Incr. Pct. Accd.
Cottons million meters 2417.0 3833.0 1030.0 26.9
Woolens million meters 88.7 181.9 19.6 10.8
Linen million square meters 135.0 465.0 148.8 32.0
Paper Thousand tons 479.0 521.0 352.6 67.0
Sugar Thousand tons 828.2 1971.8 1592.8 80.7
Leather footwear million pairs 84.7 165.3 84.4 51.

The lamentable showing in the production of articles of mass consumption was, again, contrary to the original Plan. The Seventeenth Congress, which approved the Second Plan, specified that there should be “a more rapid rate of development in the production of manufactured articles of mass consumption, not only in comparison with the First Five Year Plan… but also in comparison with the rate of development of the production of means of production during the Second Five Year Plan period.” However, the high organic composition of capital on a world scale imposed [That the bureaucracy became the wiser because of this “imposition” will be seen in the section on “Ending Depersonalization and Creating Stakhanovism.”] this law of motion on the Russian economy. Even the more rapid development of the means of production at the expense of the means of consumption did not gain for the Soviet Union an illustrious place in a setting of the production of the advanced capitalist countries:


Item Unit USSR USA Germany Japan
Electricity Kilowatt hour 215 1160 735 421
Coal Kilo 757 3429 3313 643
Pig iron Kilo 86 292 234 30
Steel Kilo 105 397 291 62
Cement Kilo 32 156 173 60
Paper Kilo 5 48 42 8
Soap Kilo 3 12 7
Sugar Kilo 14 12 29 19
Cottons Sq. meter 16 58 57*
Leather footwear Pair 1 2.6 1.1

As we see from the above table, the Soviet Union, at the end of the Second Five Year Plan, “when the first phase of communism, socialism, was irrevocably established,” had not only not outdistanced but was a long way from “catching up” with the capitalist world and compares not too favorably with “feudal” Japan.

It was in the year 1939, after the results of the Second Year Plan were first published, when the Third Five Year Plan was officially approved and had supposedly been in operation for over a year, that Molotov “suddenly” remembered that it was not so much the rate of growth, or even the volume of output, as the per capita production that defined the real state of development of a national economy. In presenting the Third Five Year Plan, he stated:

People here and there forgot that economically, that is, from the point of view of the volume of industrial output per capita of the population, we are still behind some capitalist countries. … Socialism has been built in the USSR but only in the main. We have still a very great deal to do be-fore the USSR is properly supplied with all that is necessary … before we raise our country economically as well as technically to the level not only as high as that of the foremost capitalist countries but considerably higher.

Thus the slogan of the First Five Year Plan, “To catch up with and outdistance the capitalist lands,” still remained as the task of the Third Plan.

3 – The Third Five Year Plan and Labor Productivity

The press followed up Molotov’s discovery that in the matter of per capita production, Russia was still far behind the advanced capitalist countries by systematic “revelations” of the low productivity of Russian labor. Industry, the organ of the Commissariat for Heavy Industry, reported in its issue of March 24, 1939, that for a capacity of 1,000 kilowatt hours the USSR employs eleven people but for a similar capacity in Europe and America only 1.3 people are used. The official organ proceeded to say that the example cited is not the exception but the rule; that, for instance, when an electric plant in South Amboy, N. J., is compared with a similar plant in the USSR, it is found that whereas in America 51 people are used to run the plant, 480, or 9.5 as many people, were used in Russia. Planned Economy, in its issue of December, 1940, emphasized that, despite Stakhanovism, a Russian coal worker produces 370 tons, whereas in Germany the worker averages 435 tons and in the USA 844 tons. Likewise, whereas production in a U.S. coal mine is three times as great as that in a com-parable Russian mine, the latter uses eleven times as many technicians, twice as many miners, three times as many office workers and twelve times as large a supervisory staff! The official organ of the State Planning Commission concludes that Russian labor productivity amounts to only 40.5 per cent of American labor productivity!

Despite high mechanization, labor productive on the agricultural front [Cf. Section on collectivization for more detailed treatment of agricultural front] shines no brighter. The January, 1941, issue of Problems of Economy, issued by the Academy of Sciences and the Institute of Economy, carried an article on labor productivity in Agriculture in the USSR and the USA which included the following table:

Number of times the productivity of agricultural labor in the USA exceeds that of the Russian kolkhoz.
Wheat 6.7 times
Oats 5.7 times
Corn 4.1 times
Cotton 1.8 times
Sugar beet 8.1 times
Average for Agriculture 3.1 times
Milk 3.1 times
Wool 20.1 times
Average for Livestock 6.7 times
Aggregate agricultural average 4.4 times

In 1937, the article continues to sum up, the per capita value output of the Russian worker was $166, or only one-seventh the value of output in the USA.

Previous attempts to relate labor productivity to per capita production had resulted in an article in Planned Economy for October, 1940, which included the following table:

Relationship of Industrial Level in the Development of Russia and Capitalist Countries; Per Capita Production of Russia in Percentages as Compared to the USA and Germany
USA Germany
Industrial production as a whole 24.8 28.4
Of which: Heavy Industry:
Electricity 18.5 28.4
Machine Building 31.6 56.4
Ferrous metals 27.6 36.3
Sulphuric acid 25.6 32.3
Cement 20.6 18.6
And automobile which are less than 1 percent of U.S production
Light Industry
Cotton 27.6
Wool 21.4
Leather footwear 38.5 90.9
Paper 10.4 11.9
Soap 25.0
Sugar 116.6
Gramophones 89.0
Agricultural production as a whole 54.4 123.4

The above official table reveals that, instead of being in the position of one of the most economically advanced countries, Russia is still a backward country industrially. It is interesting to note that for the period 1929-40, when, in Russia, Group B industries (means of consumption) fell from 55.6 per cent to 39 per cent of total production, while Group A industries (means of production) increased from 44.4 per cent of total production to 61 per cent, Japan’s heavy industry like-wise increased from 33.7 per cent of total production in 1929 to 61.8 per cent in 1939, while light industry declined from 55 per cent to 38.2 per cent of the total economy. The fact that is of utmost importance is that, despite the comparative backwardness of both Russia and Japan, both countries reflect the high organic composition of capital characteristic of all important industrially developed countries. The Russian rulers were neither blind to this development nor undecided about which road they would follow in order to expand their industries. Listen to the chairman of the State Planning Commission:

The plan for 1941 provides for a 12 per cent increase in the productivity of labor and a 6.5 per cent increase in wages per worker. This pro-portion between the increase in labor productivity and average wages furnishes a basis for lowering production costs and increasing socialist accumulation and constitutes the most important condition for the realization of a high rate of extended socialist reproduction.

We have followed the direction of Russian industrialization and arrived at “socialist accumulation.” Voznessensky hid nothing from us when he mapped the main road for achieving “socialist reproduction.” Besides the chief sources of life – the relationship of wages to labor productivity, more commonly known as exploitation – “socialist accumulation” grew fat on other fare. Let us discover what kind of manna that was, for it will help us considerably in understanding Russia’s economic structure.

B – “Socialist Accumulation”

“Upon what meat hath this our Caesar fed
That he has grown so great?”
Shakespeare: Julius Caesar.

The manner of swelling the Stale Treasury appeared in an innocent enough guise. On December 5, 1929, the Central Committee of the RCP passed the following resolution: “To instruct the Peoples Commissariat of Finance and Supreme Council of National Economy to draw up a system of taxation and government enterprises on the principle of a single tax on profits.” [Along with all other “original documents,” this bill of goods was passed on to the Webbs at face value, with the result that in their 1.100 pages on Soviet Communism the Webbs find room for but one sentence on the tax. reading: -The principal (tax) is a tax on the output or turnover of all industrial enterprises of any magnitude which are now all state-owned.” How the State Budget can keep on expanding from taxing its own state-owned enterprises, instead of the “non-state-owned” masses, the Webbs fail to explain.]

“The single tax on profits” turned out to have two sections: (1) a tax on profits which comprised 9-12 per cent of the state budget and (2) a turnover tax which comprised 6o-8o per cent of the state budget. It is the latter tax which is crucial – sufficient to finance all industrialization and militarization. Let us examine it in detail.

I – The “Socialized” State Budget, or Turnover

The turnover tax is a tax applied to all commodities at the point of production or immediately upon acquisition of the goods by the wholesaler. The wholesaler pays the tax direct to the State Treasury before selling goods to the retailer, who, in turn, pays the tax before selling it to the consumers. However, there is absolutely no doubt that the burden of the tax is passed on to the consumer masses since the law obliges the retailer to include the tax in the sales price of the commodities.

Contrary to the usual sales tax, which is a fixed percentage of the base price of the commodity, the turnover tax is a fixed percentage of the total sales value of merchandise, including the amount of tax. This means that whereas a 90 per cent sales tax raises the price of merchandise 90 per cent, a 90 per cent turnover tax increases the sales price tenfold. Here is how the turnover tax affects the sales price in various instance:

With a tax of 20 per cent, the price increases by 25 per cent.
With a tax of 40 per cent, the price increases by 66.7 per cent.
With a tax of 50 per cent, the price increases two-fold.
With a tax of 75 per cent, the price increases four-fold.

To get the full significance of the turnover tax, as contrasted with an ordinary sales tax, we need to consider how it affects a single commodity. Let us take bread-the staff of life of the masses – upon which the tax is 75 per cent. This means that the proletarian, in paying a ruble for his kilo of black bread, pays 25 kopeks for the actual cost of the bread, including production, distribution, transportation and delivery, and 75 kopeks of that ruble goes to the state as turnover tax.

The tax is very unevenly spread, tailing light on means of production and heavy on articles of mass consumption, which are the very “meat” of the tax. The tax on essential products of heavy industry seldom goes as high as 10 per cent. – Contrast this with the average rate of 82.8 per cent on agricultural products and recall that a turnover tax of that percent-t age will increase the sales price nearly sixfold! On food industries the average rate of turnover tax is 50 per cent and doubles the cost to the masses – and on spirits the rate of tax is 82.1 per cent! The tax on light industry is 20.3 per cent. If we once again take individual commodities, the disparity is even more shocking. The tax on coal is .05 per cent and on machinery per cent. But on textiles it is 25 per cent, thus increasing the cost of clothing one-third. Moreover, the tax on light industry is not without its fine discriminations: while women of the “intelligentsia” are taxed 68 per cent for their perfume, the peasant woman is taxes 88 per cent for her kerosene. The Stakhanovite pays 21-37 per cent of the price of her silk garment in the form of turnover tax but the working class woman pays a tax of 48 per cent on her calico!

Biggest of all taxes is the turnover tax on bread and agricultural produce. When the turnover tax was first introduced in 1930, a considerable increase in the state revenue immediately resulted. But it emerged as nothing short of a “socialist victory” in 1935 when rationing was abolished [Due consideration should, of course, be given the inflation of the ruble.] and the price of foodstuffs leaped up. Thus the turnover tax from all agricultural produce sold to the population rose from 4,340 billion rubles in 1930 to 24 billion rubles in 1935. By 1940 it was 35 billion, or 20 per cent of the entire budget!

Marx once said that “The only part of the so-called national wealth that actually enters into the collective possessions of modern peoples is their national debt.” Never was this truer than in the case of Russia, where the whole cost of industrialization and militarization has been borne by the people through that ingenious scheme known as the turnover tax, which provided 79 per cent of the total state revenue in l937. Of the 178 billion rubles in the state budget in 1940, 106 billions came from the turnover tax – a “socialized” form indeed of financing the Plans! The “national wealth” grew from 19 billion rubles in 1931 to 178 billion in 1940; the per capita national income increased from 52 rubles in 1928 to 198 in 1937. But the real wages of the proletariat decreased to half of what they were in 1928! [Cf. section on proletariat.]

II – Fight for Profit, or the Modus Operand! of a Soviet Undertaking

On June 30, 1935, Izvestia proclaimed: “Ahead of us are struggles for profit, for elimination of subsidies.” Thereafter steps were taken to create a private incentive for making a profit and achieving industry’s capacity to avoid complete state subsidization. By April 19, 1936, a decree established what was known as a directors’ fund, to be at the disposal of the management and to provide for paying premiums to the administrative staff and workers. It is a secret to no one that these funds are used mainly as premiums for directors and Stakhanovites and not for rank and file workers. This fund is made up of 4 per cent of the “planned profits” plus 50 per cent of profits achieved by the enterprise in excess of those planned for it by the state. But how are profits planned and how is it possible to have, besides, “surplus” profits? We can find the answer if we examine the modus operandi of a Soviet enterprise.

A Five Year Plan or an annual plan is elaborated which allows for a planned profit to accrue to each enterprise. The prices of commodities, as we have seen in the section of the turnover tax, are pegged considerably above the cost of production and the cost of production is measured by the cost of labor power and raw materials and by the depreciation of fixed capital which includes amortization charges. The planned profit is likewise included as part of “the cost of production.” Each individual undertaking has considerable discretion in the manner of executing the plan. For instance, the management can make profits over and above those “planned” for it by economizing on the cost of labor. The minimum wage law – and that has been in effect only since 1937 – the management has to obey. But the minimum is low enough, no to 115 rubles a month – and between that and the highest wage – 2,000 rubles monthly – there is sufficient room for maneuvering.

When the First Five Year Plan was launched, capital expenditures came wholly out of the national budget. There was then an automaticity in granting credits to all Soviet enterprises. However, since 1930 by the Credit Reform Act and subsequent banking legislation in 1931, particularly the Act of June 25, 1931, automatic credits to industrial and commercial enterprises were stopped. There was introduced what was known as the “ruble control,” that is to say, the under-takings were to be conducted on principles of cost accounting, as in any money economy. A working capital was given them and they were to function unassisted by bank credit. Where credit was necessary it was extended only to those whose credit was good. Thus there was created an incentive “to fight for profit,” and a control was established over the industrial and commercial enterprises by the banks, which saw to it that the slogan “fight for profit” was achieved – with the threat of having the enterprise declared “bankrupt” and taken out of the hands of the management.

By February, 1941, Voznessensky could report to the Russian CP conference: “The profits of socialist industry are increasing from year to year. The net profit of the plants of industry rose to nearly 14 billion rubles in 1940.” The gross profits were considerably above that figure of 14 billion as the profits tax to the State Treasury for that year amounted to 21.3 billion. The achievement of these profits was in turn helped not a little by the mode of functioning of the enterprises. Since it is state owned, a Soviet enterprise is considered to be “socialist property.” However, the worker in it does not “share the profits,” whereas the “enterprise,” that is, the management, is permitted to accumulate funds both from the planned profits and from the amortization charges. In 1940, 32.5 of capital outlays(13) came from these sources. This permitted the diversion of the state budget for national defense, without upsetting the funds for industrialization. Defense expenditures jumped from 3.5 billion (or 8.9 per cent of the entire budget) in 1933 to 56.1 billion, or 32.4 per cent of the entire budget in 1940! Although state investments in the national economy more than doubled in volume since 1933 (they were only 25.1 billion in 1933 and were 57.1 billion in 1940), they dropped, in ratio to total expenditures, from 60.8 per cent in 1933 to 33 per cent in 1940.

Not only have the industrial enterprises achieved this miraculous “elimination of subsidies” and not only do the individual members of the management of the enterprises receive a salary considerably above the no minimum rubles but the managers are able to up their 2,000 rubles monthly salary by various means. It is Malenkov, the secretary of the RCP, who reveals one of these methods to the 18th party conference, which had been told so much of “socialist accumulation.” Malenkov relates the following incident: the Middle Ural Copper Mills in the Sverdlovsk region sold plumbing materials to the Non-Ferrous Metals Supply Trust for 100,000 rubles and had them carted to the Trust. The responsible agent, who did not know about this transaction but saw the materials when he visited the Trust, bought these materials for 111,000 rubles and had them carted back to his own plant. Malenkov remarks, after he awaits the peals of laughter from his audience [Report in Pravda, along with stenographic notes of the conference, February 18-21, 1941.]: “Since it is the State Treasury that bears the expense of such twofold transactions, the director and the responsible agent must have each gotten a bonus, one for making such a smart sale and the other for such a smart purchase.” After the laughter subsides, he adds that this was the reason for promulgating the decree of February 10, 1941, forbidding the sale and/or exchange of machinery materials. And-we might add in a serious vein – that this is only one more reason why it is difficult to estimate the exact income of a factory director. His basic salary of 2,000 rubles monthly is merely the first contrast to the no to 115 rubles monthly minimum salary of the factory worker, before the former’s is swollen by bonuses, premiums, exemptions from income tax, once he has succeeded in obtaining the title “Hero of Labor.” That title can be gained not only when fulfilling the Plan by having the factory show a profit but also when one “proves” this his particular tasks have been accomplished “honorably,” although the factory he manages has not fulfilled the plan. No wonder details of the latest income taxes revealed such unbridgeable “differentiations” as earnings above 300,000 rubles a year when the “average” annual income is 3,467 rubles! 

C – The Economics of Russian Agriculture, 1928-41

Thus far we have been on the industrial front only, where we have been led from industrialization to extended reproduction and have seen how two handmaids (the turnover tax and profit motive) helped socialist accumulation grow fat. What about the agricultural front? Are the same factors at work here? What is the economy of Russian agriculture and what is its law of motion? Let us study the development of Russian agriculture since the initiation of the First Five Year Plan.

By the end of the Second Five Year Plan the Russian state declared the land was collectivized to the extent of 99.6 per cent and the peasantry to the extent of 93.6 per cent. Socialism was indeed “irrevocably established.” Percentages and labels, however, are deceiving, as we shall see when we analyze the economy prevalent on these collectivized farms (kolkhozy) and amidst the collectivized peasantry (kolkhozniki). The Russian state would have us believe that the millions transported to the Far Northern territories during the execution of the First Five Year Plan had indeed liquidated the kulak “as a class.” It may be possible that the newly-created, hot-house fashion, Lubyanka method kolkhozniki were made of a different psychological mold than were the kulaks – but the economic demand was the same: a free market. That demand was granted them in 1932. In 1935 the permanent usufruct of the land was likewise bestowed upon them. And finally, and of most recent vintage, is the appearance and the publicity attendant upon the birth of the millionaire kolkhozy. Does this prosperity embrace the whole “socialist agricultural front”?

I – The World Crisis and the Russian Famine

1 – The World Market and the Russian Agricultural Crisis

“Enrich yourself!” had been the slogan while the NEP was still in effect. This slogan the kulak rightly adopted as his own. Since the state did not pay him sufficient for his grain to achieve this enrichment, there was no inducement to pro-duce a large marketable surplus. Eighty per cent of the grain output in 1927 was consumed by the peasantry and only 20 per cent was left to feed the urban population. This contrasted poorly with the period prior to World War I (1909-14) when the peasantry consumed 63 per cent of the grain and 37 per cent of the total constituted the marketable surplus. Therefore, although the urban population was growing, there was less for it to eat. Moreover, 60 per cent of the marketable surplus in 1927 was concentrated in the hands of the kulaks, who constituted a mere 6 per cent of the peasant population. While Stalin proclaimed that it was “nonsense” to call the NEP capitalism and Bukharin declared that it was possible to reach socialism “at a tortoise pace,” the kulak had concentrated the greater part of the marketable surplus and refused to turn that over to the state. Forced collectivization was re-sorted to.

Forced collectivization achieved 78.2 per cent collectivization of the total area under crops by the end of the First Five Year Plan, instead of the 17.5 originally envisaged by the Plan. Forced collectivization wrought such havoc that the harvest declined from 83.5 million tons in 1930 to 70 million tons in 1931. The attempt of the bureaucracy to erase all past mistakes in encouraging NEPist accumulation as a “step to-ward socialism” by an absolutely dizzy speed in “collectivization” found its match in the equally terrific thoroughness with which the peasantry proceeded to slaughter its animals. When the Plan was officially declared “completed,” here is what had happened to the livestock:

1928 1932
Horses 35.9 19.6
Large horned cattle 70.5 40.7
Sheep and goats 146.7 52.0
Pigs 26.0 11.6

If we take the 1928 figure as 100, we get the following in-dices for 1932: for horses, 54.6 per cent; cattle, 57.7 per cent; sheep and goats, 35.4 per cent; pigs, 44.6 per cent!

The havoc on the agricultural front was aggravated by the reality of the world market, which would not permit Russia to tear itself out of the vortex of world economy and build “socialism in one country.” The world crisis adversely affected the price Russian agricultural produce could command on the world market. If we take 1928 to be 100, prices on the world market dropped to 67.2 and on agricultural produce, which is what Russia wished to sell in order to buy machinery, they dropped to 45.5. Tractors, which were not manufactured rapidly enough in Russia to take the place of the draft animals slaughtered, could not be bought in sufficient quantity because of lack of capital. The disorganization on the agricultural front was accompanied by a famine that stalked throughout the Soviet land. Millions died.

2 – The Effect of the Russian Famine on the Population.

Despite the fact that, on the one hand, their own statistics of decline in harvest and slaughter of cattle point to catastrophic conditions; and, on the other hand, the fact that the bourgeois journalists in Russia saw to it that the world heard of the famine, the state has denied the existence of famine in 1932-33. Apparently even the bureaucracy did not know what a toll of lives the famine had taken for by 1937 they ordered a census taken to prove that “life had become gayer.” According to the Plan, the census should have proved the existence of a population of 180.7 millions. But the data the census takers brought back told a vastly different story. Despite the fanfare that heralded the census, the data were never made public. The census was declared “defective” and another census was ordered for January, 1939, to find the missing millions. The 180.7 millions “planned” for 1937 were based on the three million yearly growth in population characteristic of the period 1922-28. On that basis the 1939 census should have re-corded a population of approximately 186 million. However, the accepted 1939 census revealed the population to be 170.5 million. No explanation was made as to the discrepancy in the figures, but much publicity was given to the 15.9 per cent increase over the 1926 census disclosed by the 1939 census. No explanation was made of the discrepancy between the planned figures and those found actually living. This 15.9 per cent increase, however, is not reflected in each age group and thereby hangs a tale of confirmatory evidence of the famine in 1932.

The age group up to seven years does not reflect the general 15.9 per cent increase. Instead it records a 1.6 per cent decrease! Moreover – and this makes the decrease even more appalling – the age group in the 1926 census to which this age group is compared was itself an abnormally small part of the population since the birth rate was below normal and infant mortality above normal in the period 1919-22. Some demographic catastrophe must have occurred in the years when “socialism was irrevocably established” to result in a decline in an age group that is contrasted to one born in the period of civil war and famine! The Stalinist statisticians, for reasons best known to themselves, did not deign to break this age group into single years and we cannot, therefore, tell whether the decree was due to infant mortality or to an abnormally low birth rate. But what is absolutely clear from the official statistics is that the “socialist” year 1932-33 stands out in black relief even against the famine year 1919-20!

That the regime was able to survive such a catastrophe is in no small measure due to the reality of the world crisis. Whereas the world crisis, on the one hand, aggravated the internal situation in Russia by upsetting its financial plans, it had, on the other hand, likewise induced such combustible situations in each of the capitalist countries that none of these governments dared take advantage of the internally weak Soviet Union to the extent of attacking its borders.

In the Soviet Union itself the powers that be felt the discontent of the village. The tops accused the rank and file of being “dizzy from success” (Stalin.). Retreat was the order of the day. The village was granted the open market. Never having had the courage of its own convictions, the bureaucracy gave the free market its benediction (April, 1932, edict of the CC of the RCP and of the Presidium of the Soviet Government) and the free market was pronounced to be a “collective farm market.” Thus was the exchange process made “kosher” by a ukase of the “socialist state.”

II – The Free Market on the Countryside

Forty per cent of the grain output goes to the state in the form of compulsory deliveries or purchases, at a price fixed by the state. Another 20 per cent of the grain crop is given for the use of the MTS (Machine Tractor Stations) and to tractor drivers. Over half of the remaining 40 per cent is consumed by the peasant population itself, leaving 15-20 per cent of grain production as the marketable surplus. Variations in the price of grain, depending upon the buyer, were tremendous. For example, 100 kilograms of rye sold in 1933 at these widely different prices:

Delivery price to the state 6 rubles and 5 kopeks
Rationed price (rye flour) 25 rubles
Commercial price (rye flour 45 rubles
Kolkhoz price (January) 58 rubles (Moscow region)

The open market price, which is some ninefold that of the state price, is inducement enough to the kolkhozniki. Though the free market it called the collective farm market, the collectives supply only 15 per cent of the agricultural commodities on the market whereas 85 per cent is supplied by the peas-ants, collectivized, or individual, thus:

Produce of kolkhozy sold by kolkhozy 15%
Produce of kolkhozy sold by kolkhozniki 45%
Produce of kolkhozniki’s own livestock and allotments 30%
Produce of Independent peasants 10%

An insight into both the prohibitively high prices on the market and of the inflation of the ruble can be gained from the fact that in 1934 the open market turnover was valued at 14,000 million rubles in current prices whereas the country’s total agricultural produce that year, calculated in 1926-27 prices, was valued at 14,600 million rubles! It is therefore not surprising that in 1935 the sale on the open market of less than 20 per cent of the marketable surplus yielded a greater sum of money than the sale of 60 per cent of the marketable surplus to the state and state organizations:

In Millions of Rubles
Income from compulsory deliveries to state 7,370
Income from decentralized collections 1,344
Income from open market sales 10,783

Because of this extreme difference between open market sales and sales to the state, 25 per cent of the whole money income (10,783 million rubles out of 43,646 million rubles) of the kolkhozniki (and the whole means not only what they earned in the kolkhoz but also outside earnings in factories off-seasons) was derived from open market sales/21) More-over, the kolkhozniki need not submit any turnover tax to the state.

At the i8th congress of the RCP held in March, 1939, it was stated that the free market turnover of foodstuffs in 1938 was valued at 24,399 million rubles, or 15 per cent of the total value of all retail trade, including public feeding. However, this does not mean that the actual commodities sold approached that percentage. Because the prohibitively high prices on the open market and the inflated rubles, the value output, as we have seen above, give no indication of the physical output. Small wonder that the newly-created kolkhozniki jealously guards an old institution: the free market!

III – Private Property in the Kolkhozy; Millionaires and Paupers

The tree market was not the only conquest of the village. in 1935 the kolkhozy were granted the permanent use of the land and the kolkhozniki the following private property rights: their dwelling, one-half to two and one-halt acres of land (depending upon the region) and the following live-stock [It is considerably higher in nomad regions]: one cow, two calves, one sow and its litter, up to ten sheep or goats, unlimited poultry and rabbits and up to ten bee-hives. The slogan for industry, “fight for profit,” had its parallel in the countryside: “Make all kolkhozniki prosperous.” Since all produce of his private property was his and the sale of it on the open market was unencumbered by a turnover tax, the kolkhoznik began to pay a lot of attention to the care of his own small plot of land, where he carried on diversified farming. Planned Economy, in its December, 1938, issue carries a report which reveals that the kolkhozniki spend 30 to 45 per cent of their time on their own homesteads while the women spend most of their time on their own plot. The reports to the 18th conference in February, 1941, related the fact that farming on their own homesteads “overshadowed farming in the collective”!

Despite the trumpeted 99.6 per cent collectivization, here is the extent to which private property has developed: al-though the kolkhozy own 79.2 per cent of the area under crops, they own only 17.6 per cent of all cows, 30.4 per cent of sheep and goats. On the other hand, the kolkhozniki, who own a mere 3.3 per cent of the area under crop, own as high as 55.7 per cent of all cows and 40 per cent of all sheep and goats. Individual (private) peasants cultivate only 5.2 per cent of the land under crops but own 12.1 per cent of draught horses, 16.9 of cows and 13 per cent of the sheep and goats. Contrast to, this the sovkhozy (state farms which are owned and managed by the state like the factories) which control 12.3 per cent of the area under crops but own only 9.8 per cent of the cows and 16.6 per cent of the sheep and goats. The sovkhozy possess only as many productive cattle as are owned by the workmen and employees who live in the country and are responsible for sowing only 1.1 million hectares of land!

Besides these legitimate claims (that is, those recognized by the state) the People’s Commissar of Agriculture reported in May, 1939, that the following surplus allotments were found to exist illicitly as private property:

778,000 hectares among kolkhoz members
203,000 hectares among private peasants
432,000 hectares among workers and employees and other non-members living in agricultural districts

The Commissar failed to inform us as to the degree of concentration of these surplus allotments. Surely they were not divided some one-tenth of an acre evenly among all homesteads or there would have been no necessity for promulgating the May 27, 1933, decree forbidding the sale or transfer of kolkhoz property. That decree also made it obligatory for kolkhoz members to -work a minimum of sixty to a hundred days a year, depending upon the region, in order to be entitled to kolkhoz membership. Kolkhoz membership, however, does not mean being an equal among equals. No, among the kolkhoz members there are millionaires and there are paupers. That is a fact, notwithstanding the praise of the millionaire kolkhozy in the Russian press as it their existence signified the realization of the slogan, “Make all kolkhozy prosperous.”

Far from eliminating the poverty of the village, the millionaire kolkhozy have so accentuated it that the “differentiation” in social composition parallels the Czarist village. There are small, medium-sized and vast kolkhozy, and the crops grown on them and the tractor drivers available to them vary greatly. The “fortunate” ones are those which possess high grade soils, produce industrial and medicinal crops for the state, have comparatively large area in proportion to the number of members, have a great many more than the average number of tractor drivers at their disposal. Pravda of January 14, 1939, reported that on November 15, 1938, 5,000 MTS still owed their drivers 206 million rubles. The report reads that, naturally, the tractor drivers left the kolkhozy serviced by these MTS. The kolkhozy that could afford to pay well and on time got the best tractor drivers. Besides having the best soil and the best tractor drivers, the kolkhozy were able to work into the millionaire class by having had a larger surplus to put away for the further improvement of the kolkhozy. A certain percentage continually grew richer and richer. To be precise, the millionaire kolkhozy comprize one-third of one per cent of all kolkhozy (610 kolkhozy out of 2,424 thousand kolkhozy in the USSR!)

In extreme contrast to this handful of millionaire kolkhozy are the PAUPER kolkhozy, which are twenty times as numerous as the millionaire ones. They constitute 6.7 per cent of the kolkhozy and earn annually 1,000 to 5,000 rubles. The overwhelming majority, 75 per cent, of the kolkhozy are medium-sized and earn about 60,000 rubles annually. This means only 172 rubles per member.

Enormous extremes prevail in the distribution of farm products as compensation for labor, as well as in farm wages. In 1937, 8 per cent of all kolkhozy allotted less than 1[1/2 ]kilogram of grain per labor day to each worker, over 50 per cent gave up to three kilos, 10 per cent distributed seven to fifteen kilos and, again, one one-third of one per cent allotted over fifteen kilos.

It must be emphasized that the labor day is not a calendar working day but a piece rate unit accorded the various categories of skilled and unskilled labor. A field hand’s working day is “worth” one-half a labor day and a tractor driver’s day is worth five labor days! Moreover, a labor day does not command the same price in all regions, as can be seen from the following table:

District Income from Days in Rubles
Vangerovsky 0.52
Slaviansky 1.37
Vannovsky 0.42
Shpoliansky 0.67
Korunsky 0.34
V. Khavsky 0.45
Bazhetsky 1.18

Thus, even for the same work, the kolkhozniki might have been paid either 34 kopeks or 1 ruble and 37 kopeks – a four-fold difference per labor unit!

In 1939 the Central Administration of National Economy Statistics reported that 25 per cent of the kolkhozniki had earned 300 labor days, the average being 150 labor days a year, while 3.5 per cent had not earned a single labor day. The other extreme to this polarization of wealth is told in Pravda of January 17, 1939, which reports that a single collective peasant family in the Soviet cotton growing region of Uzkekistan had earned 22,000 rubles. These “differentiations,” we must bear in mind, are within the kolkhoz. It is not from amongst the three million individual peasants that the “millionaires” arise but from amongst the 75 million collective farmers, out of those that have the largest tracts of land and are favored by the state with “contracts,” that is, produce industrial and medicinal crops for the state. As we have seen, the state gets approximately 40 per cent of the gross crops of the kolkhozy through obligatory deliveries, taxes and payments for use of tractors and combines. Of the surplus reverting to the kolkhozy and kolkhozniki there is economic base for both millionaire and pauper members.

IV – Mechanization and Unemployment in the Countryside

Unemployment has been officially declared abolished ever since 1930. However, such a bourgeois agronomy specialist as Sir John E. Russell, director of the Rothamsted Experimental Station, declared after his visit to Russia in 1937 that the number of workers per hectare of land was some two to four times as many as would be used in England and that, most probably, only half of the agricultural population of Russia was necessary to run production efficiently. That, de-spite the fact that between 1928 and 1938, 22.8 million individuals left the farms and the peasant population declined by 20 per cent. That Russia is still overwhelmingly a peasant country (67.2 per cent of the total population is still rural) was revealed by the 1939 census. Of the 114.6 million rural inhabitants 78.6 million are peasants. Are all these millions still necessary to agricultural requirements, despite the extent of mechanization?

The Russian state prided itself on the tremendous development of mechanization on the agricultural front, yet denied the existence of unemployment and continued to deny it until 1939. The mop-up operations against the remaining revolutionists in the 1937 Trials and the anti-labor legislation in 1938 resulted in a mass flight of labor. Industry once again found itself without sufficient help. It was then that “The Leader” indirectly revealed the existence of unemployment in the countryside. At the i8th congress of the RCP in March, 1939, Stalin appealed to the kolkhozniki for their surplus labor: “The kolkhozy have the full possibility,” he stressed. “to satisfy our request inasmuch as abundance of mechanization in the kolkhozy frees part of the workers in the country and these workers, if they were transferred to industry, could bring about a great benefit to the whole national economy.” Since that appeal was issued, it became the vogue in Soviet periodicals to speak of the “balance of labor” (a euphemistic enough name for the unemployed!) on the kolkhozy. Here is one table officially published to show the effects of mechanization:

Amount of Man-Days per Hectare of Land Under Grain Crops

1922-25 20.82
1933 12.30
1937 10.55

Here we see a full 50 per cent. decrease in the need for manpower on the farm.

Still more directly, unemployment is attested to in the December, 1938, issue of Planned Economy, which publisher the following interesting table regarding [lie portion of labor resources that took part in kolkhoz work:

January July
Men 68.2% 84.8%
Women 21.2% 68.2%

This reveals that even in the busiest month of the year, July, about 15 per cent of the men and 30 per cent of the women were surplus to labor requirements in thekolkhozy, regardless of whether they were officially declared to be among the unemployed or not. In the January, 1941, issue of the Problems of Economy there appeared an article called “Labor Productivity in Agriculture in the USSR and USA” (an article we have already discussed in the section on labor productivity on the industrial front), in which the writer comes to the conclusion that, although the Russian worker put in an average 152 labor days per year, the American farmer works 258.6 days, and that Russia has three times as many farmers as the USA: 36.6 million against 12.1 million.

However, no amount of discussions about the “balance of labor” in the kolkhozy, no scientific proof that much of labor was surplus to agricultural requirements, not even the appeal of “The Leader” himself, proved powerful enough to move the peasant off from his half acre plot of land and willingly give himself over to the factory regime. It was then that the state enacted the October 2, 1940, decree creating the state labor reserves. The decree made is obligatory for the kolkhozy and city Soviets to give up to one million youths between the ages of 14 and 17 for compulsory vocational training. After two years of training for the 14 and 15 year olds and a bare six months for the 16 and 17 year olds, the youths had to work for the state for four years at the prevailing rate of wages. The irony of this decree lies in its being officially predicated on the fact that it was made necessary “as a consequence” of the “abolition of unemployment and the fact that the poverty and ruin of the village and city are forever done away with” and “therefore” there were no people “quietly forming a constant reserve of manpower for industry”! The truth of the matter is that unemployment, poverty and misery continue to exist in the country but even under his unhappy lot the peasant will not turn to industry because conditions in the factory, especially after 1938, are well known to him and he prefers un-employment in the country instead.

And what about the proletariat who cannot escape the factory regime? What is the factory regime like? What are the production relations at the point of production?

D – Social Classes in Russia

Our study of the Russian economy would be barren of any social significance were we not to ex-amine the production relations characteristic of the mode of production. Stalin said that there were no classes in the Soviet Union “in the old sense of the word.” Let us see. Social classes are defined by the r61e they play in the process of production. What places do the “classless” groups known as the proletariat and the intelligentsia occupy in the economic system that still retains the name of the Union of Socialist Soviet Republics? Who runs the economy? Whose life-blood cements and expands it? Who benefits from it? In order of their origin, let us analyze the evolution of the “social groups” during the Five Year Plans.

I – The Proletariat

1 – The Worker and the Law

Throughout the life of the First and Second Five Year Plans labor fluidity was great. The trial of the “Trotskyist-Bukharinist fascist wreckers” only served to heighten the workers’ restlessness and not merely the fluidity of labor (labor turnover) but the actual flight of labor away from the city assumed disastrous proportions. To try to check this development a decree of December 28, 1938, introduced labor passports. This decree had no teeth in it because the worker was not the least intimidated by the threat of being fired for a day’s absence. Since he could always get another job but could not quit his job without giving a month’s notice, the worker very often took advantage of the fact that coming late twenty minutes made him a truant and caused his dismissal. On June 26, 1940, “as a consequence of the current international situation,” the 1938 decree was greatly “elaborated.” It forbade the worker to leave his job. Truancy and other infractions of the law were punishable by six months’ “corrective labor” – labor in the factory, that is, with a 25 per cent reduction in pay. Furthermore, the workers’ hours were increased from seven to eight, with a proportionate increase in the “norms” of work but no increase whatever in pay. Toward the end of that year, on October 2, 1940, the State Labor Reserves were created, which, as we saw, gave the worker free training of from six months to two years and made it obligatory for him to work for the state for four years “at the prevailing rate of wages.” But even these Draconian anti-labor laws did not succeed in making of the Russian wage slave a slave of old, an integral part of the means of production. The Russian worker found all manner and means to circumvent the legislation.

Reviewing six months of operation of the law of June 26, 1940, the Pravda of December 26, 1940, had to report that in many enterprises, especially coal mines, truancies were greater in October than in the months prior to the enactment of the barbarous anti-truancy laws. The reports to the eighteenth conference of the RCP in February, 1941, complained of the fact that the workers still absented themselves “particularly after pay day.” And on April 16, 1941, two short months before the invasion by Germany, Shvernik, head of the so-called trade unions, reported to the eleventh plenum of the Central Executive Committee of the Trade Unions that 22-32 per cent of the workers still do not accomplish their minimum “norms”; that, furthermore, workers of the same category get different wages in different factories, sometimes even in the same factory, and, worst of all “evils,” some factories continue to pay on the basic of experience rather than on the basis of the piece-work system.

However, the fact that the Russian worker has been able in great measure to circumvent anti-labor legislation does not mean that he is the proletarian of the high morale of the days of his own dictatorship. It is sufficient to counterpose the hero of those days to the “hero” of today to bring out the change in morale in striking relief. Simply contrast to the Subbotnik, who gave his Saturday services without pay to his state, the Stakhanovite, whose pay envelope is twenty times that of the rank and file worker! The Subbotnik neither complained nor boasted of his economic conditions – they were bad but the movement of the economy which he ruled over was such that he gained by the progress of the state. When, by 1928, production had gained its pre-war level, the workers’ wages were 125 per cent of that level. The Stakhanovite boasts of his pay envelope and complains to the state of the disrespectful attitude toward him on the part of the “ignorant” (read: rank and file) workers who “preen themselves of their proletarian origin.”

When the First Five Year Plan was launched the enthusiasm of the workers for the Plan was so high that during the first year all norms set by the Plan were over-fulfilled. The bureaucracy saw the blue in heaven and raised the slogan: The Five Year Plan in Four. But then the trade unions and shop committees were still functioning and collective labor agreements were in force both in state institutions and at those private concessionaires that still existed, such as the Lena Gold Fields. Rulings made by the Workers Conflict Commissions generally favored the workers in their fight with the management. On January 5, 1929, for example,Economic Life, the organ of the Council of Labor and Defense, emphasized that piece work rates are subject to the approval of the Workers Conflict Commission but that the responsibility for fulfilling the financial program rests exclusively with the management. That issue of the publication reports also that it is an ordinary occurrence for a worker dismissed by the management to be reinstated by the labor inspector.

When the worker, however, found that agricultural prices had soared so high that his salary could not even cover the purchase of sufficient food, his enthusiasm subsided and production lagged far behind the Plans. Immediately the state struck out against him. On January 24, 1929, a decree was promulgated making workers responsible for damaged goods. In 1930 it became obligatory for a factory director to insert into the worker’s paybook the reasons for his dismissal. That same year the labor exchanges were instructed to put the workers who left their jobs on their own initiative on a “special list” (read: blacklist) and deprive them of unemployment compensation.

Of food there was such scarcity that rationing had to be introduced in 1930. For the manual worker the rations were: twelve pounds and five ounces of black bread a week, and the following items, in quantities, per month: two and a half pounds ten ounces of herring, thirteen ounces of sugar and two and a half ounces of tea. Soon tea disappeared from the meager diet and we read of the workers having a kipyatok, which is plain boiled water, without either sugar or tea. Meanwhile, unemployment had been declared officially to be nonexistent and unemployment insurance was actually abolished. The worker’s ration card was transferred into the hands of the factory directors.

The workers became restless. The rate of labor turnover in 1930 was 152 per cent. But the slogan of “The Five Year Plan in Four” was not changed. The controlled press voiced criticism of the trade unions and blamed them for not seeing to it that the workers fulfilled their “norms.” In 1932 it was decreed that the worker could be fired for a single day’s absence without permission. Moreover, the factory director thereupon could deprive him not only of his food card but also of the right to occupy the premises owned by the factory, that is, the worker’s living quarters. To stifle the expression of dissatisfaction on the part of the workers, it was decided to deprive the worker of any form of redress through his trade unions by “statification” of the latter. In 1933 the liquidation of the Council of Labor and Defense into the Economic Council was decreed. Thus, while the factory director had control over the worker’s food and lodging, the worker had no trade unions independent of the state to take up his grievances. But it was impossible to decree slavery. So long as industry was expanding and workers were necessary to man the machines, the workers took advantage of that one fact and continued to shift from job to job.

The 1938 law was no harsher than the 1932 law but no more effective. The barbarous 1940 law was likewise found inadequate. Shvernik proposed that, instead of bare decrees, the state use the indirect method to get the most out of labor. Shvernik raised the slogan “To liquidate to the end equalitarianism in pay.” In other words, piece work should be the rule not only in 70 per cent of the enterprises, as heretofore, but be 100 per cent prevalent. “Petty bourgeois equalitarianism” and “depersonalization” must be “liquidated.” The Leader had been wise when, as tar back as 1931, he had said that there should be an end to depersonalization. It was high time to realize that slogan.

What, precisely, does “putting an end to depersonalization” mean?

2 – Ending Depersonalization and Creating Stakhanovism

Although the state, as the owner of all means of production, is the over-all employer, every state enterprise must pro-cure its own labor force and there is keen competition between individual enterprises because (1) there is a shortage of experienced labor; (2) productivity is so low that there is a constant need for more labor than theoretically is necessary according to the Plan. For instance, the First Five Year Plan called for an increase of laborers to 15.7 million. Actually, 22.8 million laborers were used even to achieve the un-attained production plans. Living quarters in the city be-came unbearably overcrowded but the famished peasants continued to flock to the city in millions so that a large reserve army of labor was finally created. In 1933 passports had to be introduced to restrain the peasants’ search of employment in the city. In tune with the times. Industry, the organ of the Commissariat of Heavy Industry, in its issue of March 16, 1933, informs managers who had not fired their “poor” workers because heretofore there had been severe shortage of labor that now they have a “trump card: there aremore workers in the shops than is necessary according to plans.” (Emphasis in original.) In analyzing the excessive turnover the writer of this front page article has the gall to attribute it to the “enthusiasm” of the Don Basin miners for collectivization, which made them leave their work and “themselves” put through collectivization in the village! “But, why,” he continues, “is there still excessive labor turnover?” One of the reasons he admits to be “In the communal dwellings, which have been built in the past months it is filthy, uncomfortable, boring.” But the biggest cause for labor turnover is the search for better wages. He asks management to stop bidding against management for workers. Neither this appeal nor the anti-labor legislation that was enacted nor the fact that the proletariat was deprived of the use of the trade unions which had become part of the administrative machinery of the state accomplished the trick of straight-jacketing labor. The 1931 slogan, “Let there be an end to depersonalization,” needed a big stick to enforce it. So the state arranged for a “gift from heaven” [Stalin’s expression; see his speech on November 25, 1985] to be sent them in the form of Stakhanovism.

Here is V. Mezhlauk’s (the then chairman of the Stale Planning Commission) explanation of this “gift from heaven”: “A plain miner, the Donetz Basin hewer, Alexei Stakhanov, in response to Stalin’s speech of May 4, 1935, the key-note of which was the care of the human being and which marked a new stage in the development of the USSR, proposed a new system of labor organization for the extraction of coal. The very first day his method was applied he cut 102 tons of coal in one shift of six hours instead of the established rate of seven tons.” So this “gift from heaven” came on August 31, 1935, “in response to Stalin’s speech of May 4.” In the four months that elapsed between the two events a lot was done by the state to set the stage for “the miracle,” so that the press, the photographers, the wires of the world immediately heard of “the gift from heaven.” Contrast the hullabaloo about Stakhanov with the silence as to the hot-house conditions created for Stakhanovites who get the finest tools and spoil them at the fastest pace without the necessity of paying for them as the workers have to pay for damaged goods, and the silence as to the brigade of helpers who do all the detail work but get no Stakhanovite recognition either in fame or in money! These record-breakers for a day do not repeat their records but retire behind swivel chairs while the mass of workers are now told that the “miracle” should really be their regular “norm”!

Armed with Stakhanovism, the state was able to revive the 1931 slogan, for now they had the wherewithal to enforce it. Piece-work was made the prevailing system of work in Russia. In the state of Lenin-Trotsky, where the Subbotnik was the hero, the range of pay was one to three; in the Stalinist state, where the Stakhanovite is the hero, the range of pay is one to twenty!

3 – Ending Rationing and Producing Luxury Goods

Ending depersonalization and creating this extreme differentiation in pay had its corollary in ending rationing and producing luxury goods, for the rise in pay would have meant nothing to the Stakhanovites if they could not put it to use. It is interesting, therefore, to note that whereas production of articles of mass consumption kept little pace with the demand for them, the production of luxury goods leaped almost to the miraculous heights achieved in the production of means of production goods. The tremendous increase in realized output of luxury goods contrasts sharply to the very slight in-crease in articles of mass consumption. Let us look at the luxury goods first :

1932 1936
Watches 65,000 558,000
Gramophones 58,000 337,000
Cameras 30,000 557,000
Silk (million meters) 21.5 512,000

Even the Perfumery Trust, headed by the cultured Mme. Litvinoff, showed a great increase. Contrast the 270 per cent increase in “production” of perfumes to the measly 44 per cent in the production of cotton goods for the period of the Second Five Year Plan!

Even so the Stakhanovite was dissatisfied, for it was irk-some to him to be favored only in the matter of luxury goods, whereas in the articles of first necessity the manual worker with his ration card was still favored by the state stores. And the prosperous kolkhoznik who was not entitled to a ration card, of what good was his prosperity to him? Clearly, the status of these two groups contradicted the reality of rationing. The state took steps to end this contradiction.

On November 15, 1935, the first All-Russian Conference of Stakhanovites was called to order. It was addressed by the Leader himself and Pravda waxed editorially enthusiastic about the “salt of the Soviet earth.” It initiated a campaign to teach the people “to respect those leaders of the people.” It tried to counteract the detestation of the rank and file workers toward these unsocial speed-demons. That hatred had no bounds and it was not altogether an unheard-of event that individual Stakhanovites were found murdered. The press hushed down the occasional murder and played up the state praise. These Stakhanovites, the masses were told, were “non-party Bolsheviks.” The Stakhanovites themselves were favored with something more practical than the label “non-party Bolshevik”: rationing was abolished!

The abolition of rationing made it possible for the Stakhanovite to reap full advantage of his high salary. The abolition of rationing benefited the prosperous kolkhoznik who had heretofore not been entitled to a ration card. The abolition of rationing worsened the conditions of the mass of toilers.

The state, however, pictured the abolition of rationing as a boon to the workers. A lot was said about the “rise in the consumption of the masses.” What they cited as “proof” of that was the increase in gross (not net) retail turnover. The State Treasury does not divide its revenue from turnover tax into that obtained from articles of mass consumption and those from heavy industry, but we know, through the manner in which it taxes individual items, that in no case could the percentage of turnover tax from heavy industry have been higher than 10 per cent. Hence, if we examine the gross re-tail turnover, we will see that there was not so much an increase in the turnover of goods as in the money turnover:

Gross Ret. Turnover Turnover Tax Net Ret. Turnover Incidence of Tax
1930 19,915.5 6,735.1 13,180 51.1
1931 27,465.2 10,607.8 16,863 62.9
1934 61,814.7 37,615.0 24,200 155.4
1935 81,712.1 51,900.0 29,812 174.4

Thus the effect of the turnover tax was “a rise in consumption of the masses” (read: a rise in the incidence of the tax) from 51.1 per cent in the first year of its adoption to 174.1 per cent in 1935, when rationing was abolished. According to the table above, that is according to the value of goods, production of articles of mass consumption more than quadrupled from 1930-35. But we know that, at best, production only doubled (that is, even if we take the Soviet economist’s gauge of value output and exclude only the turnover tax). Clearly, no more commodities could be consumed than were produced. But even if we accept the doubling in production of articles of mass consumption, we can still, by no stretch of the imagination, conclude that that meant a rise in the consumption of the masses. The high prices in effect after rationing made it difficult for the ordinary worker to buy even the few commodities he had bought during the rationing period. The rise in “mass” consumption meant a rise in the consumption of the labor and kolkhoz aristocracy and a decrease in the consumption of the rank and file workers, as we shall soon see.

The Russian statisticians would have us believe that there was a decrease in the prices of articles of mass consumption after rationing. As proof of that, they place parallel the prices in effect before and after rationing was abolished. However, what they place alongside of one another is not the rationed and non-rationed pricebut the open market prices, which were completely beyond the reach of the rank and file workers, and the commercial prices, that is, the state store prices afterrationing was abolished and the prices were raised. As the table below will show, the reduction in the open market price (the single uniform price) was atremendous increase nevertheless over the rationed price, which the worker had hereto-fore been entitled to:

Item Rationed Prices Open Market Single Uniform
1928 1932 1935 1935
Black bread .09 .12½ 1.00 .85
Wheat flour .22 .19 2.25 1.80
Beef .70 2.12 11.76* 5.80
Potatoes .07 .25 .50 .40
Sugar .65 1.25 4.50 3.80
Sunflower oil .49 13.50*
Butter 2.21 4.05 16.50

Thus the “victorious reduction in prices” reveals a ten-fold rise in prices since the initiation of the First Five Year Plan. The change from the open market price to the single uniform price benefited only those who were not entitled to a ration card and had to buy in the open market. But for the mass of workers the abolition of rationing meant such a rise in price as must considerably decrease his standard of living. This deserves more detailed treatment, for his standard of living has deteriorated even more since then, as we shall see in examining his real wages at the outbreak of the Russo-German war.

4 – The Worker’s Standard of Living at the Outbreak of War

The above table was the first official glimpse we have had of the rising cost of living since the discontinuation of the publication of the food index in 1930. Further data in regard to the rise in retail prices in government stores in Moscow in 1939 and 1940 were gathered by the American Embassy and published in the November, 1939, and May and August, 1940, issues of the Monthly Labor Review. In addition to reporting the prices of food, the Review also records the fact that, although there were 129 items of foodstuffs in state stores in 1936, there were only 88 on January 1, 1939, only 83 on June 1, 1939, and only 44 items on January 1, 1940. Further, that such essential commodities as milk, butter, eggs, sugar and potatoes which were listed as available, are available very irregularly. The prices quoted have been disputed by no one. [Confirmatory evidence of the validity of these prices appeared in the Pravda of October 21, 1940, which announced that potatoes have been “reduced from one ruble and twenty kopeks to ninety kopeks” and “bread raised from eighty-five kopeks to a ruble per kilo.” The only place that had quoted the ruble and twenty kopeks as the price for potatoes was the “Monthly Labor Review” article; the last the outside had had of the official figures was the quotation of potatoes at fifty kopeks a kilo in 1935.] The only subterfuge left to the Soviet apologists is that it is insufficient merely to show the rise in cost of food with-out knowing the Russian worker’s preference in food – he may prefer herring to caviar. But our method of measuring the worker’s standard of living takes away even that shabby subterfuge since the goods used are those found by an official study in Moscow in 1926 to be those consumed by the masses. [Furthermore, the benefit of the doubt In each case goes to the state. For example, of the eleven items listed in the 1920 budget, we have listed only ten because the eleventh, rice, was unavailable and rather than guess at a substitute we have simply taken for granted that the worker did without rice. Again, when the 1926 list did not mention the quality of food, we In each case put down the cheaper quality, thus the price for beef is that of beef for soup, not either roast beef or beefsteak; the prices of butter and wheat flour are second quality, etc.]

Foodstuffs consumed weekly
in Moscow in 1926
1913 1913 1928 1928 1940 1940
Quantity Price Cost Price Cost Price Cost
Black bread 2.46 0.07 .1722 0.08 .1968 0.85 2.0910
Wheat flour 0.79 0.12 .0948 0.22 .1738 2.90 2.2910
Potatoes 3.04 0.05 .1520 0.09 .2736 1.20 3.6480
Beef 0.92 046 .4232 0.87 .8004 12.00 11.0400
Mutton 0.17 0.34 .0578 0.79 .1343 14.00 2.0080
Sugar 0.45 0.34 .1530 0.62 .2790 3.80 1.7100
Milk 1.24 0.11 .1364 0.06 .0774 2.10 2.6040
Butter 0.11 1.15 .1265 2.43 .2673 17.50 1.9250
Eggs 1.60 0.03 .0480 0.20 .3200 0.85 1.3600
Sunflower Oil 0.12 0.15 .0180 0.53 .0636 15.65 1.8780
1.3819 2.5832 30.6270

Using 1913 as 100, the index of the cost of food for 1928 is 187 and for 1940 it is 2,248. The weekly wages for those years were: 1913, six rubles; 1928, fourteen rubles, and 1940, 83 rubles. Again using 1913 as our base for nominal weekly wages, we have an index for 1928 of 233, and for 1940 of 1,383. We can now construct our index of real wages by dividing the nominal weekly wage into the real cost of food, thus obtaining 125 as the index of real wages in 1928 and 62.4 per cent for 1940, when compared to Czarist times, we must not forget! Had we considered the further rise in food prices by October, 1940, it would have been a mere 55 per cent of 1913! And even that appallingly low figure, which so glaringly proves the deterioration in the worker’s standard of living, does not

picture the situation at its worst for we have considered the single uniform price in 1940 and not the open market price (to which the worker sometimes had to resort because few foods were available in state stores). On the average, the open market prices are 78 per cent higher than the state store price! There is supposed to be no black market in Russia but in the officially recognized free market beefsteak sold for seventeen rubles a kilo when the state stores sold the same commodity at ten and a half rubles!

The full significance of the miserable living standards of the Russian worker first fully dawns upon one when he reads the Stalinist publicity of the “socialized” wage – that is, the free medical care, education and reduced rent that the Russian worker is supposed to count as part of his “wages” and of which he was deprived during Czarist times. First of all, even that would not bring the worker’s real wages to more than 70.8 per cent of Czarist time, which is not much to boast of for a “socialist” land. But more than that, the point as to the “socialized” wage does not affect our comparison with 1928. All of the beneficial legislation was enacted in the first years of the workers’ state. Both in relation to education [He now has to pay for his education above the first year of high school.] and health [Consider, for example, the pregnancy laws. In the first years of the workers’ state the working woman got eight weeks before and eight weeks after pregnancy; now she gets paid for a total of only 35 calendar days. Moreover, she does not get that unless she has worked seven months in a single enterprise; and that, when you consider the extent of the labor turnover, does not often happen!] the worker fares worse, not better, after three Five Year Plans than before their initiation. And in comparison to his 1928 standard of living his 1940 standard is but one-half! His standard of living deteriorated not only in regard to the main basis, food, but also in regard to his four square meters of living space and his clothing (in rubles):

Article of clothing 1928 1939 Increase
Calico, meter .50 3.50 7-fold
Woolens, meter 6.50 180.00 28-fold
Men’s Leather Shoes 9.35 175.00 19-fold
Women’s Leather Shoes 6.89 85.00 12-fold
Galoshes 3.60 19.65 5.5-fold

We see here a fourteen-fold increase in the cost of clothing as compared to 1928. If, because of the paucity of data, we have not included rent and cost of clothing in computing the worker’s standard of living and real wages, that, too, was in favor of the state. The inescapable conclusion is that even from the most optimistic view the worker’s standard has decreased 20 to 30 per cent from Czarist times and by half since 1928! Neither should it be forgotten that we took the averageweekly wage; the minimum weekly wage of 25-30 rubles would have been insufficient to pay for his food alone, much less consider clothing and rent! Contrast to this deterioration the fact that the per capita income has increased from 52 rubles in 1928 to 196 in 1937 and that the “national wealth” leaped from six billions in 1928 to 178 billions in 1940, and you have the most perfect polarization of wealth in an “industrially advanced” society!

* * *

We have traced the development of the “social group known as the proletariat”; let us now scan the social physiognomy of the “classless intelligentsia,” which is not a class “in the old sense of the word” (Stalin), but nevertheless performs the function of ruling production and the state.

II – The Intelligentsia: The Social Physiognomy of the Ruling Class

Stalin was addressing the eighteenth party congress of the RCP in March, 1939: “Notwithstanding the complete clarity of the position of the party on the question of the Soviet intelligentsia,” the Leader complained, “there are still within our party those who have views hostile to the Soviet intelligentsia and incompatible with the position of the party. Those who hold such incorrect views practice, as is known, a disdainful, contemptuous attitude toward the Soviet intelligentsia, considering it as a force foreign, even hostile, to the working class and the peasantry… incorrectly carrying over toward the Soviet intelligentsia those views and attitudes which had their basis in old times when the intelligentsia was in the service of the landowners and the capitalists. …

“Toward the new intelligentsia a new theory is necessary, pointing out the necessity of a friendly relation to it, concern over it, respect for it and collaboration with it in the name of the interests of the working class and the peasantry.” 

The following day the press waxed enthusiastic not only of the Leader but of the group he extolled, the intelligentsia. Izvestia assured us that “these leaders of the people” were “the salt of the earth.” Stalin, being a practical man, said that these “cadres” should be valued as “the gold fund of the party.”

Molotov, addressing the same congress, was very specific as to who constituted the intelligentsia. He listed 1.7 million directors, managers, kolkhoz heads and “others” – that is, the politicians – who constituted the “most advanced people.” When to the “most advanced” he added the rest of the intelligentsia, he got a total of 9.5 million who, with their families, constituted 13-14 per cent of the population. [The 1939 census was not yet published. Molotov based his figures on the 1937 census, which was not made public because it was “defective.”]

Zhdanov, the secretary of the party, drew some practical conclusions from the Leader’s “theory” and Molotov’s statistics. It was true that since there were “no exploiting classes” there could not be any bosses. But there were factory directors and they were a part, a most essential part, of the intelligentsia, the very part whom it was necessary “to respect and obey.” Therefore, he, Zhdanov, elaborated a plan by which to pave the way for smooth collaboration of these “classless” groups. The plan boiled down to a proposal to change the statutes of the party in such a way as to erase all distinction of class origin. [When the NEP was introduced, the party of Lenin decided to keep careerist elements out of the party by establishing three categories, in the order of the accessibility of entrance into the party: the worker, the peasant and the employees.] In arguing for the change, Zhdanov fairly wreaked tears of pity from his listeners when he told them the sad tale of a certain Smetanin who at the time that he was a worker at the factory Skorokhod had become a candidate for party membership. Before action was taken upon his application for membership he turned, first, into a Stakhanovite and immediately thereafter into the director of the factory, whereupon, according to the statutes of the party, he was placed in Category 4, for alien class elements. He protested: “How am I worse now that I am made a director of the factory?” The eighteenth congress of the CP-not the factory Skorokhod – “unanimously decided” that he was no “worse,” and the old statutes of the party were thrown overboard. The party, at any rate, toed the “theoretic” line of Stalin and decided that there were no classes in Russia and the “vanguard” party therefore need have no class distinctions in its statutes. But the course of the economy which proceeded upon its way more along the line of the world market and less along Stalin’s rationalizations, the production process which gave birth to a class and was in turn determined by it clearly revealed the social physiognomy of the rulers. Much as the Central Administration of National Economy statistics tried to give the 1939 census a “classless” physiognomy, and incomprehensive as the data were, there is much we can learn from them in regard to the actual existence of classes from it. Here is how the Central Administration of National Economy grouped its population statistics:

Social Group Number Pct. of Total
Workmen in towns and villages 54,566,283 32.9
Employees in towns and villages 299,738,484 17.54
Kolkhoz members 75,616,388 44.61
Individual peasants 3,018,050 1.78
Handicraft workers in organized in cooperatives 3,888,434 2.29
Handicraft workers outside cooperatives 1,396,203 0.82
Non-Working Population 60,006 0.04
Individuals without indication of social standing 1,235,279 0.75
Total 169,519,127* 100.00

These percentages were further reshuffled in order to compare the social composition of the land of “socialism” with the land of Czarism:

Social Group 1913 1939
Workers and Employees 16.7 49.73
Collective farmers and cooperative handicraftsmen 46.9
Bourgeoisie (landlords, merchants, kulaks) 15.9
Individual farmers and non-cooperative handicraftsmen 65.1 2.6
Others (students, pensioners) 2.3
Non-working population 0.04
Not listed 0.73
Total 100.0 100.00

Note that the whole population is accounted for by using the family as the unit. That helps hide both child labor and dependents on wage earners. Note, further, that the population is practically one homogeneous mass of “classless” toilers: almost 50 per cent of the population are workers and employees and the collective farmers constitute practically all of the other 50 per cent. And where are the intelligentsia we heard so much about? The reader will search in vain for them. Yet every “academician” who set out to analyze the above figures in the official periodicals had much to say about the rise of the intelligentsia. Who are they? What do they do? In order to find them and learn their social physiognomy, we shall have to break up the single category of “workers and employees,” which hides the ruling class under its broad wings. Let us turn to the occupational classifications and find out how Russians earn a living. The headings of the following groupings are mine, but the categories are from official statistics:

[One million in the Far Northern territories was unavailable for analysis] (thousands)

Heads of tractor brigades 97.6
Heads of field brigades 549.6
Heads of livestock brigades 103.1
Tractor drivers 803.1
Combine operators 131.2
Skilled laborers in industry, including metal workers, lathe operators, welders and molders 5,374.4
Total 7,059.0

“EMPLOYEES” (thousands)

Economists and statisticians 822**
Legal personnel (judges, attorneys) 46
Engineers, architects (excluding those acting as directors) 250**
Doctors and middle medical personnel 762
Engineers, architects (excluding those acting as directors) 250**
Middle technical personnel 836
Agro-technical personnel 96**
Teachers 1,207
Cultural and technical wrks. (jnlsts, lbrns, club dirc.) 495
Art workers 46
Bookkeepers, accountants, etc. 1,769
Total 6,451


Factory dirs. And mgrs., kolkhoz, sovkhoz, and MTS pres. 1,751**
Agronomists 80
Scientific wkrs. (incl. supvrs, professors of higher education institutions 93
Others 1,550**
Total 3,174

** Double-starred figures are those given by Molotov; I could find no later figures. Stakhanovites are not listed separately; they are spread among the aristocrats of labor and “advanced” intelligentsia.

We thus get a total of 16.9 million, or only 10.02 per cent of the total population who are considered a part of the “classless intelligentsia” in the broader sense of the word. The “most advanced” of the intelligentsia, “the genuine creators of a new life,” as Molotov called them – those, that is, who are the real masters over the productive process – constitute a mere 3.4 million or 2.05 per cent of the total population. (We are not here considering the family unit since we are interested only in those who rule over the productive process, not their families who share in the wealth their husbands extract). The remaining eight per cent share in the surplus value and sing the praises of the rulers, but it is clear that they leave to the latter the running of the economy and the state.

The Central Administration of National Economy statistics, needless to say, did not reveal the exact share of surplus value appropriated by this “advanced” intelligentsia. But at least we now know who this group is and what it does. The part it plays in the process of production stamps it as clearly for the ruling class it is as if indeed it had worn a label marked “Exploiters.” Just as the Russian state could not “liquidate Category 4” merely by writing it off the party statute books, so it could not hide the social physiognomy of the ruling class merely by choosing for it the euphemistic title of “Intelligentsia.”