After the civil war, economic growth overall was rapid but largely comprised reactivating, repairing and renovating existing capacity, re-laying damaged railroads, and reabsorption of available factory labor. Industrial output—handicapped by a lack of capital and the loss of skilled laborers in the war—remained feeble. The urban/rural paradox at the heart of the confiscatory horrors of war communism did not go away, even as the economy revived. As late as 1928, the wooden plow and hand scythes remained the state of the art in agricultural technology for millions of smallholdings. To go beyond a restoration of the situation that existed prior to the war, much greater investment to develop new plant would be required.
As the middle years of the decade passed over to its later years, the NEP period was not so much ended as eclipsed. Experiments in price controls over an ever-widening series of items encouraged owners to limit production, again producing shortages in a range of goods. Thus, the choice before authorities was either a relaxation of such pricing policies, and essentially letting the market under the NEP allocate goods, on the one hand, and a more systematic control of production and distribution of key commodities, on the other. Certainly the latter had more of an ideological attraction to many, but it was the acute shortages and bottlenecks, rather than a renewed fervor for socialism, that drove the growth of administrative controls and ultimately the adoption of more centralized planning.
Ultimately, the country faced a problem of development identical to that which all developing countries have since faced: Who in society will bear the brunt of the need for accumulation of capital for the needed investment? Starting in 1926, rapid industrialization increasingly won out over balanced, slower growth that was dependent on the expansion of private agriculture and light industry, and it was backed up with a viciousness toward the peasantry that would make the requisitions of war communism appear benign by comparison.
In the fall of that year, a party conference backed favoring heavy industry in the state sector over other sectors, with the aim of catching up rapidly to—and then surpassing—the most advanced industrial nations. To orchestrate this, a long-term plan would have to be drafted. The task fell to a relatively obscure government subcommittee, the State Planning Committee, or “Gosplan.”
Established in February 1921, Gosplan was tasked with crafting a single economic plan for the entire country, to be recommended to its decision-making superiors in the Council of Labor and Defense, an economic-military cabinet itself established to move Russia beyond the ad hoc approach to planning necessitated by civil war. Gosplan was also to develop the budget and investigate options for currency, credit and banking. Under the NEP, the Gosplan bean counters, many of them experts who were not members of the Bolsheviks, crafted what was likely the very first system of national accounts in history—a complete accounting of the economic activity of a country: the aggregate of its production, income and expenditure. A handful of Western nations would begin to adopt such practices in the ’30s and ’40s, doing so more widely only after the Second World War.
After 1926, the role of Gosplan strengthened. By 1927, preparatory work for the first five-year plan was underway, amid growing political pressure to adopt ever more ambitious growth targets; an initial version would later be replaced by an optimal version, and then quickly replaced again by a version with even more fanciful targets. A colossal task, the drafting of the plan required more information and statistics from all the different sectors than could possibly be available at the time. In September 1928, Bukharin attacked the growth rates as excessive and unbalanced. The first show trial, held that year, discredited those who called for caution as “wreckers” in the pay of foreign governments. Experts who presented analysis that was insufficiently optimistic would lose their positions.
To the extent that there had been “planning” rather than a chaotic stagger from bottleneck to bottleneck, the first five-year plan, from 1928 to 1932, involved a reorganization—a systematization of the process, with repeated further overhauls. The overlap of function between Vesenkha and Gosplan was ultimately resolved by the latter’s increasing assumption of many of the functions of the former. Credit and banking were likewise reformed. Trusts had until this point been able to offer credit among themselves, but this resulted in investment occurring in unplanned fashion that was not in keeping with the overall five-year plan. Thus in 1930, inter-enterprise lending was prohibited, replaced with direct lending through the state bank and the development of a “unified financial plan” covering all investment decisions.
What came to be known internationally as the “command economy” thus lurchingly emerged over the course of the decade. State enterprises were placed under the direction of the relevant people’s commissariat—what in most countries today would be called a ministry or department—with the director of each firm following the direct orders of the given commissariat. Each produced plans for its enterprises in keeping with the general policy objectives set by Gosplan and, in turn, assessed the range of consequences of different plans and worked to reconcile them through a system of “material balances”—in essence a balance sheet not of profits or losses, but of material output from all sectors and the presumed utilization needs of all sectors. As production and distribution proceeded—either meeting, not meeting, or exceeding projections—thousands of changes to the material balances were constantly being made, much as planning within any single capitalist firm in the West might do. And indeed, as we will later see, the Soviet experience here gave rise to logistical, accounting and planning techniques that were subsequently adopted by capitalist corporations and remain at the core of their internal planning to this day. In this way, a five-year plan was not an operational one, but a strategic one; operational plans, in contrast, were devised to cover periods of one year or less. And, as occurs between most departments within a Western, capitalist firm, the use of prices was fairly limited. All this required production and distribution plans for, and thus highly detailed information from, every enterprise, with the level of detail required ever more granular. By the time the Second World War began, there were twenty-one different industrial people’s commissariats. One could say, and indeed many analysts have, that the USSR began to operate as a single factory, a company town stretching across one-sixth of the world.
By the early 1930s, political contestation had disappeared. As repression increasingly became the normal operating procedure of the party, the hundreds of bureaucrats involved in crafting the plans, as well as the managers of any factory, mine or railway, feared for their jobs, their families and their lives. The party purged 400,000 of its members in 1933.
Belgian Russian novelist and libertarian socialist Victor Serge, whose novels had been banned in the USSR, describes in his memoir how that same year he had gone out one cold morning for medicine for his perennially sick wife and noticed he was being followed. This was quite normal, but this time his minders were following more closely than normal. “Criminal investigation. Kindly follow us, citizen, for purposes of investigation.” In a minute, windowless, powerfully lit Lubyanka prison cell, a State Political Directorate (GPU) driver—arrested for listening to friends read aloud a counterrevolutionary leaflet without denouncing them all immediately—tells him that this was where prisoners waited before being taken away to be executed. A cellmate explains that he had been arrested for allegedly deducting a commission on the sale of a typewriter by one office to another. A pair of agronomists explain that the leading figures in the People’s Commissariat for Agriculture had all been scooped up by the GPU, thirty-eight in total. Their crime had been to suggest greater autonomy for farms. A leading academic journal accused them of being enemy agents and wreckers, and of “infecting horses with meningitis.” One night, Serge discovers that they have all been executed.
Anyone with any expertise was placed under suspicion, even as Stalin demanded rapid training of skilled cadre. Within Gosplan itself, those economists who urged caution were likewise accused of being saboteur
s. The “modest” targets of the first draft of the five-year plan were denounced as “deliberate minimalism” of the bourgeois “wrecker-planners.” But they were damned if they did and damned if they didn’t. Plans that were viewed to be excessively ambitious were also attacked as intentional wrecking. Wrecking was even specified as a crime in the criminal code during the Stalin era. Later in the decade, as the Great Purge was in full swing, even the organizers of the 1937 census were sent to camps for the crime of wrecking, as the resulting data showed Russia to have 8 million fewer citizens than expected—an empirical contradiction of Stalin’s public claim that the Soviet model’s incredible success was resulting in the addition of 3 million citizens per year.
The Paradox of the Peasantry
Somehow, despite the tragedies and the trials, the USSR would become a superpower of the first order—the first nation to put a human in space—whose sole economic rival was the United States. How was this great leap forward achieved?
The answer can be found in the decisions of those who viewed civil liberties as an unaffordable bourgeois bagatelle, at best, and a red herring deployed by the class opponents of the construction of socialism, at worst, to resolve “the paradox of the peasantry” through force. It had long been widely agreed that agricultural production could only substantially advance through the concentration of land and the elimination of subsistence agriculture, as had occurred in the most advanced capitalist states. For a time, the failures and excesses of war communism had produced a new common sense that such a transition had to be achieved by careful, slow incentivization, rather than a revolution from above. That delicate consensus would not last.
Perhaps as a result of the goods famine and low prices for grain, procurement after the harvest of 1927 had proven to be far below the previous year’s level, and the patience of the regime had worn thin. The takings were not enough to feed the towns and the army, still less to deliver sufficient supplies of industrial crops. Meanwhile the weather, and thus the harvest, had been decent that year; indeed in the Urals and western Siberia, it had actually been quite good.
Some in the Bolshevik leadership called for an increase to grain prices, and thus a reduction in the funds that could be spent on industrialization, but Stalin and his now-dominant supporters instead went on the attack. The rich peasants had to be hoarding! Using what would become known as the “Urals-Siberian method,” for the first time taking direct action themselves without even feigning to assure the agreement of what remained of formal decision-making structures, Stalin sent off a troop of officials and police, shutting down markets, expelling private traders, and ordering peasants to deliver grain on pain of arrest. Stalin denounced local officials, ordering them to seize the grain of kulaks and “speculators.” Other senior officials began to copy the method in other regions, even as other members of the Politburo protested. Bukharin, before being put on trial for treason and executed, denounced the “Genghis Khan” military-feudal extraction of tribute, but only did so in private. Confiding in fellow Oppositionist Lev Kamenev in July 1928, he remarked: “Stalin is an unprincipled intriguer who subordinates everything to preservation of his own power. He has made concessions now, so that later he can cut our throats. The result of this will be a police state.”
Despite these coercive measures, the procurement campaigns yielded less grain than the previous year. Stalin announced he was convinced that forced collectivization—together with ensuring that the peasants overpaid for manufactured items, and that they were underpaid for their wares—would produce the funds necessary to industrialize the country. Procurements would also be easier if the 25 million small farms were consolidated into far fewer (but much larger) farms.
Earlier forced grain procurements, however ruthless, had empowered local soviets to fine or imprison households that had not delivered the quantity demanded. Now such quotas were placed on whole villages, with the aim of putting collective pressure on the so-called “kulak elements,” the first wave of what would come to be termed the “liquidation of the kulaks as a class.”
The year of 1929 did, in fact, result in a 49 percent increase in state procurements of grain over the previous year, perhaps encouraging Stalin to step up the pace of what he called the “Great Turn” in an article in November of that year. By February 20, 1930, it was announced that half the peasants had joined collective farms, some seven weeks after the Great Turn had been formally put into action by Stalin’s fiat.
Kulaks, and anyone accused of being a kulak, were not to be allowed to join the new collectives, but instead were arrested and deported. Stalin told the Central Committee that kulaks were making ready to undermine the Soviet regime, but materially, the “dekulakization” process was likely intended to frighten the rest into the collectives, to speed up the process. Chaos, bewilderment and resistance were the predictable results, with a concomitant sharp decline in the harvest. Assuming their livestock would be taken from them, peasants slaughtered animals on a vast scale. Meanwhile the new collective farms had no experience in animal husbandry en masse, and animals died of neglect, while the party activists sent to direct the process had no better knowledge. In Kazakhstan, the sheep population dropped by more than four-fifths. A wave of panic-driven suicides swept the better-off peasants.
In many regions, a great many peasants simply walked out of the collective farms, the “kolkhoz.” Perhaps most ironic amid the whole villainous process was that many such fugitives actually then formed much-simpler cooperatives in order to survive. “It is one of the tragedies of this period that this and other kinds of genuine cooperation were so quickly wiped out,” Nove laments.
Many other peasants fled to the towns. The government responded to the rapid growth in the urban population by taking still more from a weaker crop. In 1931, the procurements were of such an extent that there was insufficient grain left over to eat. Despite a relaxation of measures in the face of the yawning chaos, in 1932 a great famine engulfed all the grain-producing regions of the country, taking between 3 and 7 million lives. It is this period whence we hear tales of cannibalism recounted by survivors of Ukraine’s Holodomor, or “hunger plague.”
Amid these horrors, we again find that far from planning leading to poor information and thus to shortages, which in turn lead to authoritarianism, it is the reverse process that obtains: it is authoritarianism that undermines the quality of information in the system. Perhaps the most instructive exemplar of how illegitimate authority undermines information occurred during the collectivization process. The government was, understandably, keen to encourage the use of tractors by peasants to increase productivity. So the “political departments” of the state-run tractor service sent specially selected, politically reliable volunteers to the villages to develop capacity to run such agricultural machinery, to introduce some order to the chaos, and also as a mechanism of political supervision of the peasants. In any normal circumstances, and shorn of such overt politicization, we would describe at least the first element of this process as “agricultural extension”: extending technical and scientific knowledge from the academy to the farm, a common practice in the West and developing countries. Put simply, it’s farmer education through practice. But during the collectivization process when these volunteers arrived, the reverse happened: it was the experts that learned from the peasants. These volunteers spoke to the villagers and found out what had happened. They became convinced of the immediate need to reduce the procurement quotas and to introduce positive incentives for peasants. But in response to these findings, the state leadership concluded the collective farms had to be purged of “saboteurs” among the bookkeepers, agronomists and storekeepers—destroying, in the process, the most important information at the base of the economy.
We also cannot underestimate the profoundly economically destabilizing impact of the Great Purge from 1936 to 1938, in which almost 700,000 individuals were executed and more than 1.5 million detained, according to records declassified after the end of the Col
d War. In the Moscow Trials, most of the Old Bolshevik leadership of the party from the time of the revolution were forced to confess their conspiracy against the regime, whereupon they were executed or imprisoned. By 1938, of the 1,966 delegates to the last party congress in 1934, 1,108 had been arrested; so had 98 of the Central Committee’s 139 members. In death or the gulag, these Old Bolsheviks were joined by engineers, technicians, statisticians, managers, armies of civil servants and key figures responsible for planning, including the minister of finance. Those that escaped the repression were completely cowed, mechanically following orders and avoiding any responsibility or initiative out of sheer terror.
Such deterioration of information occurred at all levels of society, in all fields, as either the guardians of crucial data were jailed, murdered, became too scared to report accurate data, or otherwise were replaced by politically trustworthy incompetents who were unable to gather, wrangle or deliver accurate data. If diligent, careful and precise gathering of correct data is the foundation of planning, then the Soviet Union under Stalin has to be considered a mockery of a planned economy.
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