Although they had no result, the mere fact of these negotiations taking place helps explain the puzzling equanimity of Russia’s business community toward a regime which openly threatened it with economic ruin and even physical annihilation. Russia’s bankers and industrialists treated Bolshevik pronouncements as revolutionary rhetoric. In their view, the Bolsheviks would either turn to them for help in restoring a collapsing economy or fall. So it happened that in the spring of 1918 the Petrograd Stock Exchange, formally closed since the outbreak of the war, suddenly came to life, as securities, especially bank shares, rose in over-the-counter trading.20 The optimism of big business, reinforced by Bolshevik overtures and the knowledge that the government was negotiating with Germany a trade agreement that would open Russia to German capital, caused it to turn a deaf ear to the pleas of White generals for financial assistance. In the spring of 1918, the White movement appeared to businessmen a hopeless gamble compared with the prospects of collaboration with the Bolshevik Government.
As soon as the Brest-Litovsk Treaty had been ratified, the Bolshevik leaders turned their attention to the economy: now that power was theirs, they were no longer interested in squandering the country’s wealth by turning it over to the peasants and workers to divide among themselves. The time had come to organize production and distribution in a rational, efficient, “capitalist” manner, through the restoration of labor discipline, the reintroduction of accountability, and the adoption of the most modern technology and management methods. Trotsky signaled the change of attitude in a speech on May 28, 1918, with a strangely “Fascist” title, “Work, Discipline, and Order Will Save the Soviet Socialist Republic.”21 He called on the workers to exercise “self-restraint” and accept the fact that the management of Soviet industry would have to be turned over to specialists, drawn from the ranks of previous “exploiters.”
At the time, Lenin argued with great conviction but little success in favor of state capitalism, which would place the marvels of capitalist management and technology at the disposal of the new state. Only by adopting the best that capitalism had to offer could Russia build socialism:
Let us … take the most concrete example of state capitalism. Everybody knows this example. It is Germany. Here we have the “last word” in modern large-scale capitalist engineering and planned organization,
subordinated to Junker-bourgeois imperialism
. Cross out the words in italics, and in place of the militarist, Junker, bourgeois, imperialist
state
put
also a state
, but of a different social type, of a different class content—a
Soviet
state, that is, a proletarian state, and you will have the
sum total
of the conditions necessary for socialism.
Socialism is inconceivable without large-scale capitalist technology based on the latest discoveries of modern science. It is inconceivable without planned state organization, which makes tens of millions of people strictly observe a unified standard in production and distribution of products.
22
What is state capitalism under Soviet power? To achieve state capitalism at the present time means putting into practice the accounting and control carried out by the capitalist classes. We have an example of state capitalism in Germany. We know that Germany has proven superior to us. But if you reflect even slightly on what it would mean if the foundations of such state capitalism were established in Russia, Soviet Russia, everyone who has not taken leave of his senses and has not stuffed his head with bits and pieces of book learning would have to say that state capitalism would be our salvation.
I said that state capitalism would be our salvation; if we had it in Russia, the transition to full socialism would be easy, within our grasp, because state capitalism is something centralized, calculated, controlled and socialized, and that is exactly what we lack
.…
23
The economic program that Lenin favored was thus much more moderate than the one that the Bolsheviks would actually adopt. Had he had his way, the “capitalist” sector would have been left essentially intact and placed under state supervision. The resulting cooperation, which posited the inflow of foreign (mainly German and American) capital, was meant to bring the Bolshevik economy all the benefits of advanced “capitalism” without its political side effects. The proposal had many features in common with the New Economic Policy introduced three years later.
But this was not to be. Lenin and Trotsky ran into fanatical opposition from a number of groups, of which the Left Communists were the most vociferous. Led by Bukharin, and comprising an important segment of the party’s elite, the Left Communists had suffered a humiliating defeat over Brest-Litovsk, but they continued to operate as a faction within the Bolshevik Party and to argue their case in the pages of their organ, Kommunist. The group, which included Alexandra Kollontai, V. V. Kuibyshev, L. Kritsman, Valerian Obolenskii (N. Osinskii), E. A. Preobrazhenskii, G. Piatakov, and Karl Radek, saw itself as the “conscience of the Revolution.” It believed that, since October, Lenin and Trotsky were sliding toward opportunistic accommodation with “capitalism” and “imperialism.” Lenin treated the Left Communists as Utopians and fantasts, victims of a “childhood disease of socialism.” But the faction enjoyed powerful support among workers and intellectuals, especially in the Moscow party organization, who felt threatened by Lenin and Trotsky’s proposals to introduce “capitalist” methods. The proposed changes calling for the dismantling of Factory Committees and the abandonment of “workers’ control” in favor of a return to responsible individual management inevitably reduced the power and privilege of party officials. Lenin could ill afford to alienate these intellectuals and their supporters among the workers at a time when the Bolsheviks were under fire for Brest and had lost majorities in all the soviets. He could hardly insist on a course which commonsense recommended to him when he heard a metalworker say about the negotiations with Meshcherskii: “Comrade Lenin, you are a great opportunist, if you allow for a breathing spell also in this field.”*
The elements of the War Communist system that actually won out found reflection in an essay which Larin published in April 1918. Although he pretended merely to elaborate on the principles enunciated in his November 1917 article, Larin now presented a new and different economic program. All Russian banks were to be nationalized. So was industry, branch by branch: there was to be no collaboration between the state and private trusts. “Bourgeois” specialists could work for the economy only as technical personnel. Private trade was. to be abolished and replaced by cooperatives working under state supervision. The economy would be subjected to a single national plan. Soviet institutions would keep accounts without reference to money. In time, state control would be extended to agriculture, beginning with the unused land of ex-landlords. The only concession to private capital would be to foreign interests which would be permitted to participate in Soviet Russia’s economic development by providing technical personnel and granting loans for the importation of equipment.24
With this program, the Left Communists in April 1918 overruled Lenin, plunging Russia headlong into the utopia of instant socialism.
Bukharin remained the leader of the Left Communists, but after suffering defeat over the Brest Treaty, he yielded to others the opposition to Lenin’s state capitalism. The principal theorist of Left Communism was Valerian Obolenskii, better known by his pen name, N. Osinskii.† Born in 1887 the son of a veterinarian with radical sympathies, he joined the Bolsheviks at the age of twenty. He spent one year in Germany studying political economy, which, in his mind, qualified him to write on economic subjects, notably Russian agriculture. Immediately after their coup, the Bolsheviks appointed him director of the State Bank, which post he held until March 1918, when he resigned in protest against the Brest Treaty.
His Construction of Socialism, written in the summer of 1918 and published that fall, provided the bluepr
int for War Communism.25 The regime’s economic tasks, as Osinskii defined them, involved three operations: seizing control of the “strategic points” of the capitalist economy, purging it of unproductive elements, and imposing on the country a comprehensive economic plan.
Following Hilferding, Osinskii placed at the top of his priorities the seizure of banks, the “brain of capitalism.” They were to be transformed into clearing agencies of the socialist economy.
Next came the nationalization of private property in the means of industrial and agricultural production, both large-scale and small. This meant not only the legal transfer of property titles but a purge of the personnel, with the previous owners and managers being replaced by workers. These measures would strike at the very heart of capitalism and, at the same time, make it possible to rationalize production, through the appropriate allocation of resources.
The next step, the nationalization of commerce, was the most difficult. The government would take over all commercial syndicates and large trading companies. Exercising a monopoly on wholesale trade, it would set prices on commodities; in time, all commodities would be distributed by state organs, preferably free of charge. The elimination of the free market was an essential measure:
The market is the nidus of infection from which constantly ooze germs of capitalism. Mastery of the mechanism of social exchange will eliminate speculation, the accumulation of fresh capital, the emergence of new proprietors.… A correctly realized monopoly on all products of agriculture, under which it will be forbidden
to sell
on the side a single pound of grain, a single bag of potatoes, will make it utterly senseless to carry on independent village agriculture.
26
Liquidation of retail trade called for a fourth step: compulsory consumer communes enjoying a monopoly on articles of prime necessity. This institution would do away with speculation and “sabotage” and deprive capitalists of yet another source of profit.
Finally, it would be necessary to introduce compulsory labor. Its guiding principle would be simple: “No one has the right to refuse work assigned to him by the [labor] bureau.” Compulsory labor was not necessary, for the time being, in the rural areas, which had an excess of hands, but it was indispensable in the cities. Under this system, the “labor obligation … becomes a means of compelling people to work, replacing the old ‘economic’ stimulus, which, in plain language, meant the fear of dying from hunger.”
It was a basic premise of Osinskii’s plan that for political as well as economic reasons the economy could not be organized on a part-capitalist, part-socialist basis: a clear choice had to be made. Even so, in deference to Lenin, he called his program, not “socialism” or “War Communism,” but “state capitalism.”
The economic program of the Left Communists drew strong support from party members and workers, beneficiaries of workers’ control, who in no time formed a new interest group: they no more wanted to give up the factories they had taken over in 1917 than the peasants to surrender the seized land. The Left SRs also sympathized with these ideas. Lenin viewed them skeptically but he had to give in: it was the price of regaining the popularity lost at Brest. In June 1918, under conditions which will be detailed below, Lenin decreed the nationalization of Russian industries. This measure ended the possibility of “state capitalism” in the sense in which Lenin understood the term. It was a leap into the unknown.
The architects of War Communism, its theorists and executors—Osinskii, Bukharin, Larin, Rykov, and others—had only the most superficial acquaintance with the discipline of economics and no experience in business management. Their knowledge of economics derived largely from socialist literature. None of them had run an enterprise or earned a ruble from manufacture or trade. Except for Krasin, who did not take part in these experiments, the Bolshevik leaders were professional revolutionaries, who, save for brief stints at Russian or foreign universities (devoted mostly to political activity), had spent their entire adult lives in and out of jail or exile. They were guided by abstract formulae, gleaned from the writings of Marx, Engels, and their German disciples and from radical histories of European revolutions. What Sukhanov said of Larin applied to all of them: “a poor cavalryman who knew no obstacles to the leaps of his fantasy, a cruel experimenter, a specialist in all the branches of state administration, a dilettante in all his specialties.”27 That such rank amateurs would undertake to turn upside down the fifth-largest economy in the world, subjecting it to innovations never attempted anywhere even on a small scale, says something of the judgment of the people who in October 1917 seized power in Russia. Observing these people in action, one recalls Taine’s picture of the French Jacobin:
His principle is an axiom of political geometry, which always carries its own proof along with it: for like the axioms of common geometry, it is formed out of the combination of a few simple ideas, and its evidence imposes itself at once.… Men as they really are do not concern him. He does not observe them; he does not require to observe them; with closed eyes he imposes a pattern of his own on the human substance manipulated by him; the idea never enters his head of forming any previous conception of this complex, multiform, swaying material—contemporary peasants, artisans, townspeople, curés and nobles, behind their plows, in their homes, in their shops, in their parsonages, in their mansions, with their inveterate beliefs, persistent inclinations, and powerful wills. Nothing of this enters into or lodges in his mind; all its avenues are stopped by the abstract principle which flourishes there and fills it completely. Should actual experience through the eye and ear plant some unwelcome truth forcibly in his mind, it cannot subsist there; however obstreperous and telling it may be, the abstract principle drives it out …
28
These qualities were nowhere more evident than in early Bolshevik fiscal experiments designed to introduce a moneyless economy.
Marx had written a great deal of sophisticated nonsense about the nature and function of money, in which he employed Feuerbach’s concepts of “projections” and “fetishes.” He defined money variously as the “alienated ability of mankind,” something that “confounds” all the “natural human qualities,” “crystallized labor,” and a “monster” which separates itself from man and comes to dominate him. These ideas greatly appealed to intellectuals who neither had money nor knew how to earn it but longed for the influence and gratifications that money brings. Had they been more familiar with economic history, they would have realized that some unit of measurement, whether or not called “money,” had existed in every society practicing the division of labor and the exchange of goods and services.
Under the spell of these ideas, the Bolsheviks both overrated and underestimated the role of money. They overrated it in respect to “capitalist” economies, which they viewed as totally controlled by financial institutions. They underestimated it in respect to “socialist” economies, which they believed could dispense with it: as Bukharin and Preobrazhenskii put it: “Communist society will know nothing about money.”29
It followed from Hilferding’s thesis that by seizing Russia’s banks, it was possible, in one fell swoop, to seize control of the country’s industry and trade.* This belief accounted for Lenin’s optimism that Russia could quickly become socialist—that nationalization of banks would accomplish “nine-tenths of socialism.” Osinskii likewise declared it the single most important measure.† Although the expectation of a quick and easy conquest of Russia’s capitalist economy by such means proved entirely illusory, the Bolshevik Party stubbornly adhered to Hilferding’s doctrine. Its new program, adopted in 1919, claimed that by nationalizing Russia’s state and commercial banks, the Soviet Government had “transformed the bank from a center of domination of finance capital … into a weapon of workers’ power and the lever of economic revolution.”30
As concerned money, the Bolshevik theoreticians wanted to abolish it altogether by depreciating it into “colored paper” and replacing it with a comprehensive
system of distribution of commodities by means of ration cards. In Soviet publications in 1918–20 many articles argued that the disappearance of money was inevitable; the following is a fair sample:
Parallel with the strengthening of the socialized economy and the introduction of greater planning in distribution, the need for monetary tokens [i.e., money] should diminish. As it gradually disappears from circulation in the socialized economy, money turns into a property outside the direct influence of government on the private producer, which is why, despite their constantly growing quantity and the continued need for further [money] emissions, money begins to play in the overall movement of the national economy an ever-diminishing role. And this process of, as it were, objective depreciation of money will receive further impetus to the extent that the socialized economy is strengthened and developed and an ever-widening circle of small private producers is pulled within its orbit—until, finally, following the decisive triumph of state productivity over private productivity, there will emerge the possibility of a deliberate withdrawal of money from circulation through the transition to a moneyless distribution.
31
In the jargon which Marxists favored, the author was saying that money could not be dispensed with as yet because the “small private producer” (read: peasant) still remained outside state control and had to be paid for his product. Money would become redundant only “with the decisive triumph of state productivity over private productivity”—in other words, after full collectivization of agriculture.
The Russian Revolution Page 105