Paying the Bill
The heavy involvement of foreign workers and professionals in Soviet industrialization proved short-lived. By 1933, the net flow had reversed, with more foreigners headed out of the Soviet Union than into it. Within a few years, very few remained.
To a great extent, it was a matter of money. Foreign contracts, with workers and companies, generally called for payments in dollars, European currencies, or gold. To finance purchases of foreign equipment and expertise, the Soviets exported grain, gold, artwork, and raw materials, including timber, oil, flax, and fur. But the value of these goods was falling. A global drop in commodity prices began in the late 1920s, even before the American stock market crash, forcing the Soviets to increase foreign sales to stop the depletion of their gold and hard currency reserves. In August 1930, Stalin called for more than doubling grain exports, “Otherwise we risk being left without our new iron and steel and machine-building factories. . . . We must push grain exports furiously.” That meant ever greater and more brutal requisitioning of grain in the countryside and hunger throughout the country.
By the time first new factories were ready to begin operating, the Great Depression had hit the United States and Western Europe, so that there were plenty of skilled workers out of jobs willing to head to the Soviet Union simply to get work, if not out of political sympathies. But the Depression also led to a further drop in prices for grain and raw materials, accelerating the decline of Soviet foreign reserves. In mid-1931, Soviet leaders began curtailing the importation of foreign equipment and the use of foreign experts. The Americans were hit particularly hard, as firms in other countries offered better terms and credit arrangements not available from the United States.
When Alpert Kahn’s consulting contract ended in 1932, the Soviets offered to renew it only if the company agreed to be paid in rubles, which were not convertible into dollars. Kahn traveled to Moscow in an effort to save the partnership, but in the end his company brought home its personnel. In 1934, after purchasing the number of vehicles and parts specified in their contract with Ford, the Soviets terminated that agreement, too.71
But it was not just a matter of money. Inflated expectations of what foreign equipment, methods, and experts could accomplish led to something of a disillusionment with Americanism as the new factories, erected at enormous cost, had difficulty meeting their targeted output. The effects of the Depression in the West also dampened enthusiasm for the United States and its representatives, as a traditional Marxist critique of the internal contradictions that crippled capitalist progress reemerged. Vassily Ivanov reported after his trip to the United States early in the Depression, “I saw with my own eyes how the productive forces were outgrowing their narrow capitalist framework. The factories were working at one third of capacity, repressing their powers, crushing and constricting their exuberance of technical potentialities.” The United States might not continue to be a leader in industrial innovation.
At the same time, a new generation of Soviet managers and specialists was beginning to come into its own, with up-and-coming leaders increasingly confident they did not need foreign tutors, whom in some cases they came to resent. A general turn toward suspicion of outsiders and even xenophobia emerged in the mid and late 1930s, accompanied by ever more grandiose claims of Soviet superiority in all realms. In accounts of the industrialization drive, the role of foreigners became downplayed or erased. After the mid-1930s, nonnatives who decided to stay in Russia were viewed with suspicion and had difficulty finding work or even staying out of prison.72
While the Soviets began moving away from directly copying methods, plants, products, and processes developed under capitalism, the basic thrust of their industrial drive remained unchanged. The Second Five-Year Plan and a Third Five-Year Plan, begun in 1938 but cut short by World War II, continued to prioritize heavy industry, though they gave greater attention to consumer goods as well. After World War II, the Soviet Union resumed the prewar model of multiyear economic plans and concentrated investment in giant production and research complexes, often with accompanying new cities. The crash industrialization of the First Five-Year Plan created a template that would be used in the Soviet Union until its demise and in many of its satellites and allies as well.73
But many of the key figures in the industrialization drive did not live to see the spread of the model they helped create. The Great Terror of the late 1930s wiped out the pioneers who brought the “Amerikansky Temp” to the Soviet Union and built the first giant factories. Many of the participants in the industrialization debate of the 1920s, including Bukharin and other top Bolsheviks, were arrested on patently absurd charges, convicted in show trials, and executed, or, in Trotsky’s case, murdered in exile. Sergo Orjonikidje committed suicide in 1937. Alexei Gastev, the Soviet Taylorist, survived repeated internal party battles, only to be arrested in September 1938 on charges of “counterrevolutionary terrorist activity” and executed the following spring. Saul Bron, who as head of Amtorg had signed agreements with American companies worth tens of millions of dollars, including the pacts with Kahn and Ford, was arrested in October 1937, tried in secret, and shot in April 1938. Others executed at roughly the same time included Vassily Ivanov, the first directors of the tractor plants in Kharkov and Chelyabinsk, the first director of the Gorky auto factory, and the head of the auto trust who signed the contract with the Austin Company. Such leaders of the big industrialization projects, who generally had political but not technical credentials (making them dependent on foreign or old-regime expertise), having done their jobs and built potentially threatening local power bases in the process, were simply wiped out, replaced by a generation of newly trained managers, usually from peasant or working-class backgrounds, who had no ties to the early days of the Bolsheviks and the ideological and organizational resources they provided.74
Did It Work?
Did the giant factory succeed in the Soviet Union? The question carries a different meaning and weight than if asked about earlier incarnations of industrial giantism. Elsewhere, big factories had been built by individuals or corporations for a narrow purpose, their own economic reward. Sometimes they also had philanthropic or social goals, but those were almost always secondary and often instrumental to the economic success of the factory and its payoff to its creators and investors. By contrast, in the Soviet Union, giant factories were seen as a means to very large social and political ends: industrialization, modernization, national defense, and the creation of socialism. While earlier big factories were conceived of as a way to expand production, in the Soviet Union they were seen as a way to transform society, culture, and, ultimately, world history.
By the measure of aggregate output and economic growth, the Soviet industrialization drive of the 1930s succeeded. The infrastructure and industrialization efforts under the Five-Year Plans accelerated the growth of industry and the overall national economy to rates that surpassed those in the West, where the Depression left the leading industrial countries in stagnation. In sector after sector, Soviet industrial output zoomed up, in many cases with industrial giants playing a critical role.
Economists have debated if the same kind of growth could have been achieved through a more balanced program of development, less focused on concentrated investment in landmark gigants. As the Soviets discovered, there were diseconomies of scale in creating islands of industrial giantism in a vast, undeveloped nation. Expensive, advanced equipment went unused, unmaintained, or prematurely worn down through overuse. Skilled labor shortages proved endemic and supply chains immensely difficult to create and sustain, given the thinness of the national industrial base and the difficulties of coordination through centralized planning structures rather than markets. Unable to depend on reliable flows of quality material through official channels, industrial managers built their own off-the-books networks of suppliers, using barter, favors, and other methods, creating shortages and difficulties elsewhere, while they themselves often passed defective goods up
the chain.75
But the success of the giant factory cannot be fully judged using only economic measures. The scale of the great Soviet industrial projects, more than the scale of projects in the capitalist world, served an important ideological function. Giantism contributed to the massive social mobilization required for the industrialization drive, which became the moral equivalent of revolution and civil war. The world-historic scale of Soviet factories and infrastructure contributed to a cultural revolution in which modernity and progress were linked to Soviet power and mechanization. And it worked, as millions of Soviet citizens made heroic efforts to construct new facilities, a new economy, a new society.
At a price. The industrialization drive was linked, by design, to squeezing as much as possible out of the peasantry, even to the point, at times, of famine. The brutal collectivization of agriculture pushed millions of peasants away from their homes to industrial employment. Conditions during the First Five-Year Plan were worst in the countryside, but real wages and living standards for workers fell, too. Circumstances at the new plants were harsh and shortages widespread.
But comparatively the situation did not look quite so bad. Housing was very crowded, but lack of private space was nothing new to most peasants or even to most urban workers. What was new, for many, was electricity, clean running water, and central heating. Furthermore, by the standards of the early phases of industrialization in England and the United States, working hours in the Soviet Union were short, in the early 1930s generally seven hours a day (not counting dinner breaks) and six hours in dangerous occupations. By the late 1930s, material conditions for workers notably improved.76
Isolating the giant factory from everything else going on in the Soviet Union during the 1930s—including the collectivization of agriculture and the Great Terror—is impossible, so judgments on the efficacy of industrial giantism as a developmental strategy are difficult to make. But in one realm, the record seems clear. The creation of the metallurgy, automotive, and tractor industries, especially the plants located deep in the Soviet interior, proved critical to Soviet survival and ultimate victory during World War II. One reason the Soviets sited so many industrial behemoths in the Urals was to distance them from any invasion, positioning them beyond not only land attack but also aerial bombardment. Many key industrial facilities were designed to be quickly convertible to armaments production. While the Reuther brothers were working in the Gorky tool room, army specialists would show up regularly to supervise the construction of dies and fixtures for making military equipment, which would be tested and stored for possible later use. During World War II, the factory produced cars, trucks, jeeps, ambulances, armored cars, light tanks, self-propelled guns, and ammunition for the military. The Stalingrad tractor factory also poured out light tanks, until the Germans destroyed the factory during the epic battle for the city. The Chelyabinsk tractor plant proved even more important, before the war producing self-propelled artillery pieces, howitzers, and light and heavy tanks. After the Germans invaded, machinery and personnel from other factories, including the Kharkov tractor plant and diesel engine factory, were moved to Chelyabinsk. Over the course of the war, the expanded complex produced 18,000 tanks and self-propelled guns, 48,500 tank engines, and over seventeen million pieces of ammunition. As John Scott wrote in early 1942, the Magnitogorsk plant and the broader Ural industrial district it was part of were “Russia’s number one guarantee against defeat at the hands of Hitler,” which, of course, also helped ensure the victory of Britain and the United States.77
But if the giant Soviet factory contributed to industrialization, modernization, and national defense, its role in the creation of socialism depends on what is meant by the term. As state-owned endeavors, the Soviet giants were part of an economic and social system built around government and—to a lesser extent—cooperative ownership of the means of production. But whether this made the Soviet Union a socialist society, a state capitalist one, or something else entirely was a subject of fierce debate in the 1940s and 1950s and is still a matter of controversy in the much-shrunken universe of people who care about such things.78
Did socialism, or state ownership, change internal relationships within the factory? A bit, but not much. Even in the years of purges and terror, Soviet workers felt free to criticize managers and government officials about how plants operated, probably more so than workers at, say, Ford or U.S. Steel before they unionized. But ironically, at the same time that American unions began to grow, Soviet unions, which once gave workers something of an autonomous base, were defanged of independence and real power (though their role in providing social benefits expanded). During the late 1930s, workers sometimes used the atmosphere of suspicion and secret police power to bring down disliked officials. After the terror abated, harsh new labor laws criminalized absenteeism, lateness, and quitting without permission (a throwback to English law at the time of the first factories). More fundamentally, social relations inside the factory remained hierarchical, in much the same way they were in the West. As one journalist wrote, describing the Stalingrad tractor factory, the assembly line was “no longer an issue of disagreement between capitalists and socialists.”79
When in 1931 H. J. Freyn, who had spent four years in the Soviet Union as a leading consultant to its metallurgy industry, gave a speech to a meeting of the Taylor Society—disciples of the father of scientific management—about the First Five-Year Plan, he described the Soviet Union as a dictatorship, but he felt that at its current stage dictatorship was “essential for the welfare of the people.” And in any case, “a modern business enterprise can scarcely be operated or managed by applying the principles of democracy.” Like Kahn, Freyn barely mentioned communism when he discussed Soviet industrial development.80
The giant factory shaped the path along which the Soviet Union developed, and became a mainstay of ideas of economic growth and modernity in the country for decades to come. But as an institution unto itself, it proved remarkably impervious to its surroundings.
CHAPTER 6
“COMMON REQUIREMENTS OF INDUSTRIALIZATION”
Cold War Mass Production
FROM THE EARLY 1940s THROUGH THE 1960s, IT BECAME common among political intellectuals and academics, especially in the United States, to argue that the United States and the Soviet Union were becoming more similar, that ultimately they would come to closely resemble one another. James Burnham first made this case to a broad public in his 1941 book, The Managerial Revolution. Burnham, an American backer of Leon Trotsky, initially accepted the exiled Russian leader’s characterization of the Soviet Union as a “workers’ state,” even if degenerated by Stalinism and the rise of a “Bonapartist bureaucracy.” But in late 1939, he broke with Trotsky, coming to see the U.S.S.R. as neither socialist nor capitalist but as a new type of social organism, in which a managerial elite ruled through control of state-owned property. Burnham contended that bureaucratic collectivism, or what he called “managerial society,” represented a universal phase of historical development, the actual successor to capitalism, rather than socialism, which had been posited as such by leftists for a century. The Soviet Union, he argued, represented the advance guard of a form of social organization that the United States and European capitalist nations inevitably would come to adopt.1 A few years later, Friedrich von Hayek, coming from the political right, made a similar claim, seeing a growth of collectivism in capitalist societies pushing them toward the “serfdom” to which he believed socialism was headed.
The idea that the Soviet Union and the United States were converging soon gained traction among American social scientists. The leading sociologist of the post–World War II era, Talcott Parsons, was an early adopter of “convergence theory,” which came to be embraced, in one form or another, by such luminaries as C. Wright Mills, Alex Inkeles, Herbert Marcuse, and Walt Rostow. Leftists like Mills and Marcuse fretted that the stifling bureaucracy of Soviet life was being re-created in the West, while Parsons and other liberal prop
onents of modernization theories thought that the Soviet Union would inevitably become more like the United States.
What these theories shared was the belief that economic development was behind convergence. As Marcuse put it in 1958, both the Soviet Union and the United States were shaped by the “common requirements of industrialization,” which pushed them toward bureaucracy, centralization, and regimentation. In effect, these authors believed, modern industry existed as a social and cultural system independent of the economic arrangements in which it was embedded. Ultimately it would mold the larger society. They adopted “industrial society” and “industrial civilization” as descriptive terms and analytic categories that bridged the Iron Curtain, capturing the central features of life in “developed” or “advanced” nations. By contrast, “capitalism” and “communism” were seen in sophisticated academic circles as atavistic slogans, of little explanatory value in understanding modern life.2
Ironically, at the very moment when some of the leading minds of the left, right, and center were declaring that industrial development was resulting in a convergence of the capitalist and communist blocs, their actual industrial practices were diverging. Through World War II, in both realms, industrial giantism was adopted as a road to economic development, social progress, and modernity, a heroic effort celebrated in art, literature, and politics. But after the war, American corporations moved away from ever-upping the scale of industry, deciding that the industrial behemoth had reached its limits of profitability and control. Rather than continuing to concentrate production in industrial colossuses, they began to decentralize manufacturing in smaller, scattered plants. By contrast, leaders in the Soviet Bloc—and in other parts of the world—retained a belief in the efficacy of gigantic industrial projects as means for rapid economic growth and as symbols of national prowess and social progress. Though there were multiple reasons for the diverging fate of the giant factory in the United States, the Soviet Bloc, Western Europe, and what came to be called the Third World, the course of labor organization was critical. The intensity of class conflict in the United States brought unprecedented benefits to workers in large-scale industry, making what retrospectively has come to be called the “American Dream” come true, at least for a while. But it also contributed to the demise of the giant factory. Elsewhere, with labor less volatile, industrial giantism continued to be seen as a viable path to the future.
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