The true driving force behind the Supreme Economic Council—the “Saint-Just of Russian economics”—was Iurii Larin. Although little known even to specialists, this half-paralyzed invalid, always in pain, could take credit for a unique historic accomplishment: certainly no one has a better claim to having wrecked a great power’s national economy in the incredibly short span of thirty months. He exerted a powerful influence on Lenin, who in the first two and a half years of his dictatorship listened to Larin more attentively than to any other economic adviser. Larin was always ready with quick and radical solutions to difficult problems, which earned him the reputation of an economic “magician.” His office, in a suite at the Metropole Hotel, was the place of pilgrimage for Russians with the most fantastic economic schemes: none of them was rejected out of hand, many were seriously considered, some were adopted. It was only in early 1920 that Lenin grew disenchanted with his advice and had him expelled from the Presidium of the Supreme Economic Council, which until then he had dominated by the force of his ideas and personality.*
Born in 1882 in the Crimea as Michael Aleksandrovich Lure into a Jewish intelligentsia family, Larin spent his childhood in what he himself described as an “oppositional atmosphere.”68 He joined a radical organization at the age of eighteen, and from then on led the life of a typical Russian revolutionary, alternating between underground work, organizing illegal workers’ unions, and serving stretches in prison and exile. Politically, he sided with the Mensheviks. He had no higher education: such knowledge of economics as he acquired came mostly from the reading of newspapers, fat journals, and radical pamphlets. During the war he turned to journalism and filed from Stockholm reports on internal developments in Germany for the liberal newspaper Russkie vedomosti. His widely read articles, brought out after the Revolution in book form, displayed fascination with German “War Socialism.”69 In the spring of 1917 he worked in the Petrograd Soviet and in September went over to the Bolsheviks.70 In the first months of the Bolshevik dictatorship he drafted and on occasion issued a number of important decrees. It was largely owing to him that Soviet Russia established the Supreme Economic Council, initiated economic planning, defaulted on its foreign debts, nationalized its industries, and, for all practical purposes, abolished money.
92. Iurii Larin.
The Supreme Economic Council attracted non-Bolshevik intellectuals, mainly Mensheviks and independent experts, because it offered work that required no political commitment and allowed opponents of the regime to feel they were serving the people. In no time at all it expanded into a bloated bureaucratic hydra centered in Moscow in a sprawling building on Miasnitskaia Street that had once housed a second-class hotel, its many heads spread across the country. Ten months after its creation (September 1918) it employed 6,000 functionaries, whom it paid 200,000 rubles a day in salary.71 This staff and this payroll would not have been excessive if the Supreme Economic Council did what it was designed to do—namely, direct the country’s economy. But in reality it occupied itself mainly with issuing orders to which no one paid attention and forming bureaucratic organs that no one needed.
The Supreme Economic Council never even partially realized its mandate of “organizing the national economy and state finances” if only because of the vast private sector that remained outside its control. It did not even manage the task of distributing food and other consumer goods because it had to concede this responsibility to the Commissariat of Supply. In effect, the Supreme Economic Council became the principal agency that administered—or, more accurately, attempted to administer—Soviet Russia’s nationalized industries: in other words, a Commissariat of Industry under a different name.
The Bolsheviks began to nationalize industrial enterprises soon after October. In most cases, they took over plants on the grounds that the owners and managers engaged in “sabotage”; these they turned over to Factory Committees. On occasion—this happened to the textile mills of the former Provisional Government minister A. I. Konovalov—the expropriation was motivated by political vendetta. The owners of the nationalized enterprises received no compensation. This spontaneous, unplanned phase of nationalization culminated in the expropriation in December 1917 of the Putilov Works. Most expropriations were ordered by the local authorities on their own initiative rather than on government instructions—at first by the soviets and then by the regional branches of the Supreme Economic Council. A survey conducted in August 1918 showed that of the 567 enterprises that had been nationalized and the 214 that had been requisitioned, only one in five had been taken over on direct orders of Moscow.72
The systematic nationalization of Russian industry got underway with the decree of June 28, 1918.73 The impetus came from Larin. Having attended the commercial negotiations in Berlin, Larin concluded that German businessmen intended to seize control of Russia’s major industries. In the Brest-Litovsk Treaty, the Bolsheviks had agreed to exempt citizens and business firms of the Central Powers from Soviet economic laws, allowing them to hold properties and to pursue business activities on Russian territory. Owners of the nationalized properties were to be adequately compensated: a provision that made it possible for Russians to sell their enterprises to Germans, who could either take control or claim compensation. Larin convinced Lenin that only a sweeping nationalization measure could prevent the Germans from becoming masters of Russia’s industry.74 If Lenin hesitated to act it was out of concern over the German reaction: we know from Larin that many Bolsheviks feared the measure could provoke the Germans to break diplomatic relations and launch an anti-Bolshevik “crusade.” The fears proved groundless: while complaining that it was “disloyal,” “[the Germans] nevertheless acquiesced to the nationalization of all [Soviet] industry and did not declare war over it.”75 The reason was that German interests were guaranteed full compensation for their nationalized assets, whereas Allied interests received none.
The decree of June 28 ordered the nationalization, without recompense, of all industrial enterprises and railroads with capital of one million rubles or more owned by corporations or partnerships. Cooperatives were exempt. The equipment and other assets of the nationalized businesses were taken over by the state. Managers were ordered to remain at their posts under the threat of severe penalties.
From then on the process of nationalization proceeded apace. By the fall of 1920, the Supreme Economic Council was nominally in charge of 37,226 enterprises with a total work force of 2 million; 13.9 percent of the nationalized enterprises had one employee and almost half lacked any mechanical equipment. In fact, however, the council managed but a small portion of these establishments (4,547, according to one authority), the remainder being state-owned in name only.76 In November 1920, the government issued a supplementary decree nationalizing most small-scale industries.77 On paper, at the beginning of 1921, the government owned and managed nearly all of Russia’s manufacturing facilities, from one-man workshops to giant factories. In reality, it controlled only a fraction and managed even fewer.*
The Supreme Economic Council—that “trust of trusts,” as it has been called78—developed a massive bureaucratic machinery, headed by a Presidium. It was subdivided into agencies organized vertically (functionally) and horizontally (territorially). The vertical organizations were “trusts” called either glavki or tsentry. These numbered forty-two in late 1920, each responsible for one branch of industrial production and directed by a board. They bore melodious acronyms, such as Glavlak, Glavsol, and Glavbum, for the paint, salt, and paper industries, respectively.79 Larin, who played a major role in designing the council’s structure and operations, admitted later that he had borrowed his ideas from abroad: “I took the German Kriegsgesellschaften, translated them into Russian, infused them with worker spirit, and gave them currency under the name glavki.”80 In addition to glavki, the Supreme Economic Council had a network of provincial branches, of which there were nearly 1,400 in 1920.81 The organizational chart of the council resembled a celestial map on which the Presidium re
presented the sun and the glavki, tsentry, and regional agencies the planets and their moons.82
Abroad, this gigantic enterprise of “socialist construction” made a great impression. Soviet propaganda in the West spoke glowingly of the “rationalization” of Russian industry under the benevolent eye of an all-seeing government, but it stressed intent rather than performance. The graphs and charts depicting how Russian industry was regulated aroused the admiration of many Westerners trying to cope with the chaos of the postwar world. But inside Russia, from the pages of newspapers and journals, as well as reports of Party Congresses, a very different picture emerged. The claims of economic planning proved to be a travesty: as late as 1921 Trotsky confirmed that no central economic plan existed and that, at best, “centralization” was carried out 5–10 percent.83 An article in Pravda in late 1920 bluntly admitted: “khoziaistvennogo plana net” (“there is no economic plan”).84 The council’s glavki had but the vaguest notion of the condition of industries for which they were responsible:
Not a single
glavka
or
tsentr
disposes of adequate and exhaustive data which would enable it to proceed to a genuine regulation of the country’s industry and production. Dozens of organizations conduct parallel and identical work of collecting similar information, as a result of which they gather totally dissimilar data.… The accounting is conducted inaccurately, and sometimes up to 80 and 90 percent of the inventoried items escape the control of the relevant organization. The items which are unaccounted for become the object of wild and unrestrained speculation, passing from hand to hand dozens of times until finally reaching the consumer.
85
As for the regional branches of the council, these were said to be in a state of constant friction with their Moscow headquarters.86
In sum, contemporary accounts depict the council as a monstrous bureaucratic jumble which meddled instead of administering and whose main function was to provide a living for thousands of intellectuals. At the beginning of 1920, the council’s regional branches and the economic departments of provincial soviets gave employment to nearly 25,000 people,87 overwhelmingly members of the intelligentsia. A crass example of bureaucratic bloating was the Benzene Trust (Glavanil), which had on its payroll 50 officials to supervise a single plant employing 150 workers.* One of the Supreme Economic Council’s officials has left a colorful description of the types who attached themselves to it. It deserves citation since it depicts a situation not unknown to other agencies of the Communist Government:
The lower posts were occupied mainly by hordes of young ladies and gents, previously bookkeepers, shop assistants, clerks, or university, gymnasium, or “external” students. This whole army of youths was attracted to the service by the relatively high salary and the low amount of work required. They spent entire days loitering in the many corridors of the vast structure; they flirted, ran out to buy halvah and nuts for the office pool, distributed among themselves the theater tickets or meat conserves which one of their number had managed to get hold of, and, as a sort of accompaniment to these business dealings, cursed the Bolsheviks.…
The next, most numerous category [of employees] consisted of onetime officials of the tsarist ministries. In joining the Soviet service they were motivated either by material need or, no less often, by longing for the accustomed work, to which each had devoted more than a decade of his life. One had to see with what passion they threw themselves on the “outgoing” and “incoming” materials, on “memoranda,” “reports,” and the rest of secretarial archwisdom, to understand that they found it more difficult to live without this atmosphere of paperwork than to make do without bread and shoes. These people tried to serve conscientiously; they were the first to come and the last to leave, they stuck to their chairs as if chained. But perhaps precisely because of this conscientiousness nothing ever came of their work except unbelievable nonsense, because the disorder and impulsiveness of the higher authorities confounded all the “incoming” materials and “memoranda” that they spun out with such loving care.…
Finally, the non-Communist majority of middle-level officials and a segment of higher ones consisted of
intelligenty?
of various types. There were here, so to say, romantic natures for whom service in one of the enemy’s citadels smacked of high adventure. There were people of no principle, entirely indifferent to everything in the world except their own well-being. There were ordinary shady characters who sought to attach themselves to the Bolshevik chaos so as to be able, under the cover of its darkness and confusion, to loot for all it was worth. There were people of another type as well: specialists who hoped to salvage the work that they held dear, and those, like myself, who joined in order to “soften the regime.”
88
So much for Lenin’s pet idea, “the transformation of the whole of the state economic mechanism into a single huge machine” operating on a “single plan.”
The Bolsheviks had somewhat better success in overcoming the managerial anarchy that followed the spread of workers’ control. The syndicalist policies of the regime just before and just after October 1917 were a device to lure workers away from the Mensheviks: it helped the Bolsheviks gain majorities in the Factory Committees. After the signing of Brest, it was decided to revert to traditional methods of individual industrial management with the employment of “bourgeois specialists.” Trotsky spoke about this in March and Lenin in May 1918.89 In fact, many of the previous owners and managers had never left their jobs, and by terms of the June 28, 1918, nationalization decree were forbidden to do so. The Supreme Economic Council was full of these people as well. In the fall of 1919, a visitor from Siberia noted that at the head of many of Moscow’s tsentry and glavki
sit former employers and responsible officials and managers of business, and the unprepared visitor … who is personally acquainted with the former commercial and industrial world would be surprised to see previous owners of big leather factories sitting in Glavkozh [the leather syndicate], big manufacturers in the central textile organization, etc.
90
But Lenin’s and Trotsky’s insistence on the need to utilize the skills of “bourgeois specialists” in the service of the “socialist” cause ran into resistance from Left Communists, trade union officials, and Factory Committees. Resenting the power and privilege which the members of the old “capitalist” elite enjoyed in Soviet industries by virtue of their expertise, they harassed and intimidated them.91
Until the end of the Civil War, the government had great difficulty enforcing the principle of personal management. In 1919, only 10.8 percent of industrial-establishments had individual managers. But in 1920–21, Moscow vigorously resumed the campaign, and at the close of 1921, 90.7 percent of Russian factories were run in this manner.92 The argument in favor of “collegiate” management, however, did not die down, its proponents arguing that individual management alienated workers from the regime and allowed “capitalists” to retain control of expropriated plants in the guise of serving the state.93 Before long, this argument would be raised at the national level by the so-called Workers’ Opposition.
The narrowly economic objective of Soviet industrial policies under War Communism was, of course, to raise productivity. Statistical evidence, however, demonstrates that the effect of these policies was precisely the contrary. Under Communist management, industrial productivity did not merely decline: it plunged at a rate which suggested that, if the process continued, by the mid-1920S Soviet Russia would be left without any industry. There exist various indices of this phenomenon.
I. O
VERALL LARGE-SCALE INDUSTRIAL PRODUCTION
*
1913
100
1917
77
1919
26
1920
18
II. O
UTPUT OF SELECTED INDUSTRIAL GOODS IN
1920
&nb
sp; 94
(1913 = 100)
Coal
27.0
Iron
2.4
Cotton yarn
5.1
Petroleum
42.7
III. P
RODUCTIVITY
(in constant rubles)
of the Russian worker
95
1913
100
1917
85
1918
44
1919
22
1920
26
IV. N
UMBER OF EMPLOYED INDUSTRIAL WORKERS
†
1918
100
1919
82
1920
77
1921
49
In sum, under War Communism, the Russian “proletariat” fell by one-half, industrial output by three-quarters, and industrial productivity by 70 percent. Surveying the wreckage, Lenin in 1921 exclaimed: “What is the proletariat? It is the class engaged in large-scale industry. And where is large-scale industry? What kind of a proletariat is it? Where is your [sic!] industry? Why is it idle?”96 The answer to these rhetorical questions was that Utopian programs, which Lenin had approved, had all but destroyed Russian industry and decimated Russia’s working class. But during this time of deindustrialization, the expenses of maintaining the bureaucracy in charge of the economy grew by leaps and bounds: by 1921 they absorbed 75.1 percent of the budget. As for the personnel of the Supreme Economic Council, which managed Russia’s industry, it grew during this period a hundredfold.*
The decline in agricultural production was less drastic, but because of the small margin of food surplus, its effect on the population was even more devastating.
The Bolshevik Government treated the peasant population as a class enemy and waged on it a regular war by means of Red Army units and detachments of armed thugs. The program of 1918—to choke off all private trade in agricultural produce—had to be modified in view of fierce peasant resistance. In 1919 and 1920, the government extracted food from the peasantry by a variety of means: forced deliveries, barter of food for manufactured goods, and purchases at somewhat more realistic prices. In 1919, it allowed limited quantities of food to be sold on the open market. Dairy products, meats, fruits, most vegetables, and all foodstuffs growing wild were initially exempt from state control but later regulated as well.
The Russian Revolution Page 107