This Soviet World

CHAPTER VII
BUILDING THE NEW ECONOMY

One of the most striking characteristics of Soviet life to a new arrival is the passionate interest which citizens show in new industries, modern equipment, figures of carloadings, economic statistics generally. The “romantic passion” of the Russians for machinery, the visitor is apt to call it. He himself is long since bored by machinery which has recently put him out of work; he finds it difficult to understand this passion. He has come to see “the revolution,” to study the characteristics of planned economy or the amazing change in human concepts. He finds the revolutionary background taken for granted by Soviet citizens; they want to show him factories.

The mood of the Soviet Union today is a mood of tremendous struggle and incredible conquest in which individual values and problems pale before the brightness of one great problem whose solution is told off by the ever-rising curve of production, the opening of steel mills, the successful mastery of tractor plants, machine building works, textile factories. It is a mood in which a newly literate servant girl will hail the rain running into her leaky shoes if that rain means harvest. Harvest somewhere far off on farms she never sees.

It is not surprising that economic facts have a vital interest for Soviet citizens. The changes in the country’s economic life since the Revolution have been stupendous and the results are felt in every person’s daily living. Fifteen years ago when first I entered the Soviet Union, the country was ravaged by famine and pestilence. Civil war and foreign intervention had ruined farming, industry, transport. Street-cars were not running in Moscow, street lights had long since burned out without replacements, and two fuelless winters had so destroyed the entire city’s plumbing that water pressure could not rise above the second floors. In the best hospital of Samara, where I lay ill in 1921 with typhus, there were but two clinical thermometers for hundreds of patients. Thermometers, light bulbs, water pipes were only a few of the million articles which long war and blockade kept out of the Soviet Union and which could not be manufactured in the few and backward factories of that vast agricultural land.

I have lived through fifteen years of incredibly rapid progress which have almost wiped out all memory of the past. To dwellers in the Soviet Union, the pre-war period seems already pre-historic, and even 1921 seems a century ago. We have seen in these fifteen years a more than ten-fold increase in industrial production; we have seen a leap in farming from the sixteenth century into the twenty-first. We have lived through a series of epochs sharply distinct from each other in the regulations affecting our daily existence, but all these periods have been characterized by one continuous fury of energetic endeavor.

The reasons for energetic endeavor were very plain to the people of a land just emerging from foreign intervention and long blockade. “War is implacable,” said Lenin. “It puts the question with merciless sharpness. Either perish or overtake the advanced countries and surpass them. . . . Either full steam ahead or perish. This is how history has put the question.”¹ All Communists hold that in the present epoch of worldwide imperialist expansion, it is the fate of economically backward lands to be parceled out among the imperial nations. Soviet Russia, unless she could make herself economically independent, had to fear the fate which has overtaken China, “a military field of operations of foreign enemies and pecked at by everybody who cares to do so.”²

If a rapid rate of economic development was necessary to preserve even the independence of the country, it was still more necessary as a prerequisite for a socialist commonwealth. The abundant life for every toiler which socialism implies demands lavish production; it cannot be attained in a country where the means of production is the individually owned tool. The material conditions for a prosperous socialist commonwealth exist today in America far more than they ever existed in Russia. Sharing the wealth cannot take place until there is really wealth to share. Socially owned wealth must be based on socially owned factories. Russia had the problem of first building the factories.

The rapid development of Soviet Russia’s economic wealth was considered of crucial importance by Lenin, not only for the welfare of the Russian people, but even for the future of world-wide socialism. Faced by the handicap of a backward, semi-feudal land, the workers of the new revolutionary country had nonetheless one advantage—they were the joint owners of their country and all of its productive wealth. They must prove to the world that even against great difficulties this one advantage was decisive. Even in 1921 in the depths of economic ruin Lenin said: “We are exercising our main influence on the international revolution by our economic policy. All eyes are turned on the Soviet Russian republic. . . . If we solve this problem, then we shall have won on an international scale for certain and finally. That is why questions of economic construction assume for us absolutely exceptional significance.”³

There is a strange paradox in the economic development of the Soviet Union which even foreign resident must notice. It is that every slight achievement costs infinite effort, yet mighty achievements are won in an incredibly short time. The penalty for Russia’s ancient backwardness is to be found in an inefficiency which hampers every movement—taking a tramway, buying a spool of thread, securing a room. The difficulty of making even one blast furnace function properly arouses frantic despair in the hearts of foreign specialists. Yet in spite of these difficulties, the Soviet Union advances at a speed unknown even to the most efficient capitalist countries.

This speed is due to the tremendous energy and initiative of millions of workers and farmers who are conscious owners now of their own means of production, and who know that whatever they create will be their own permanent gain. Their initiative is correlated by a system of social planning. Thus arises that paradoxical combination of individual inefficiency with tremendous social momentum. In the most developed capitalist countries the efficiencies of ten million individuals pull in conflicting directions, giving small gain to society. But each new achievement in the Soviet planned structure, attained with such painful difficulty, reinforces the sum total of a million gains.

So obvious and so widely known are these benefits of social planning in the Soviet Union that in recent years it has become a common dream in many countries to transfer painlessly the technique of planning to the capitalist system, thus gaining the blessings of socialism without the harsh shock of revolution. In America especially, where the highly developed processes of production could so obviously produce plenty for all, the illusion arises that somehow some genius, some group of super-brains sitting in New York or in Washington, ought to be able to find the magic secret of putting those processes to work. It is clear that an individual owner can plan his factory and bring it to a relatively high state of efficiency as compared with the days of handicraft. But can a government brain trust, however brilliant, plan the disposal of Rockefeller’s oil wells, or the internal organization of U. S. Steel? To ask this question is to answer it, if it has not been answered already by the history of the NRA. Only owners can plan an industry and dispose of its products. Under capitalism plans of different owners clash.

For a socialist state, the simplest and most basic act of government is the planning by worker-owners of the expansion and improvement of their jointly owned properties. Planning of this type takes place not only in those central institutions of Moscow where the foreign visitor habitually looks for it; it begins simultaneously at the workers’ bench. Production meetings after work discuss shop problems, what holds back production, how much it can be increased, and by what means. These discussions are enlarged on a factory scale; they go from the factory to the central offices of the industrial trusts. Word comes back from the central organizations to the shop that the country needs certain new machines. “Can we make them in our plant?” Delegates from other industries which need the machines arrive, explain, mutually consult. The inventions and suggestions of the local workers thus widen into a nation’s plan.

The plan is, however, no mere blueprint to be fulfilled with exactness. In the absolute and technical sense, one cannot speak of it as a final “plan” at all. For although every factory, farm, school and government institution checks its monthly and annual achievements by its plan, yet the proudest boast is always to have overfulfilled it, i.e., broken the plan by doing more than intended. The plan is therefore a standard of what is expected, a flag of challenge, but in no sense a limit. There is no limit set in the Soviet Union. The aim is the fullest development of the creative and productive powers of the country. The more production, the better. It will be seen at once how impossible such a conception of planning becomes under capitalism. It is based on the assumption that the worker-owners of the nation’s production will be able to use everything that they care to make.

Socialism is not created in a day; it is not achieved by voting and not even by seizure of power. Seizure of power is only a prerequisite. Socialism involves the expansion and organization of the collectively owned properties of the country and the building of a good life for everyone thereon. This was the purpose of the October Revolution, and in spite of all the accounts in the press of the world for eighteen years about Soviet “changes of policy,” this purpose has never changed in the slightest degree. The tactics used have, however, been conditioned by both internal strength and international relations. Not until 1921, when the new workers’ state had beaten back the armies of intervention, was it possible to begin the building of the national economy.

When the wars of invasion were over, industry had sunk to one-fifth of pre-war, the production of cotton goods was only 7 per cent of normal, iron and steel production had almost entirely ceased. Grain reserves were exhausted, and the drought of 1921 led directly to the greatest famine in Russian history. The New Economic Policy, adopted at that time, encouraged all forms of economic development, both those of capitalism and those of socialism. Meantime each year the Communists led the working class of the country to concentrate a desperate, organized struggle for victory in one important field after another—victories often achieved at the expense of heavy temporary sacrifices elsewhere.

The year 1922 saw the successful fight to establish a state bank and a partially stable currency by high banking charges which ruthlessly exploited all the industries of the country. In 1923 emphasis turned to the hard-pressed industries; for the first time since the revolution, their balance sheets reached “self-support,” at the expense of excessively high prices to the consumer. There followed a two years’ effort to cut prices; consumers’ co-operatives were widely developed as a link between the state factories and the peasants. By 1926 co-operative and government trade had increased threefold, successfully passing the private middle-man who had previously controlled over 80 per cent of the rural turnover. During the next two years, emphasis turned again to the restoration of industry, which reached by 1928 the pre-war standard of production. The Soviet workers had rebuilt their war-devastated country without the aid of the foreign credits which flowed to help all the war-injured capitalist lands of Europe.

Yet this attainment was still of low standard, the pre-war production of backward tsarist Russia. The ancient plants were working to full capacity, but they could not begin to supply the needs of workers and farmers who expected a higher standard of life than before the Revolution. Each year the shortage of goods increased. Soviet industry could not expand further except by extension of basic capital, new buildings, more machines. Any threatening war would still find the country lacking not only in commodities, but in that heavy industry on which, in our modern mechanized world, is based the means of production in peace and of defense in war.

Could Soviet Russia develop her industries rapidly and make herself economically independent, or must she live, as tsarist Russia did, by export of farm products, chancing her future on a hostile capitalist world? This problem set sharply the still more fundamental problem whether socialism could be built in one country and if so, by what means. Russia’s basic industry was state-owned but this industry was insufficient to supply the people with goods. The primitive farming system, made still more primitive by the splitting up of the former landlords’ estates into small subsistence farms, which partly consumed and partly wasted much formerly marketed grain, was increasingly failing to feed the growing cities. In 1927 the Russian farms attained the pre-war sown area of 280,000,000 acres and the pre-war grain production of somewhat over 80,000,000 tons, but only about half of the pre-war marketed grain was reaching the market. Socialized industry was like an island in an ocean of medieval agriculture, whose tides constantly threatened to undermine the base of socialism. “As long as we live in a small peasant country,” Lenin had said, “there will be a more solid economic basis for capitalism than for Communism.”⁴

Farming must be brought out of the Middle Ages, modernized and made efficient. For this two roads of development were possible. The employing peasants, known as kulaks, who already owned the best of the rural means of production, better plows, more horses, occasional threshers, creameries and flour mills, might be allowed to expand, to acquire tractors, combines, and the additional land which these machines could cultivate, dispossessing more and more landless peasants into the ranks of unemployed. Thus capitalist farming grew in other countries out of the feudal ages. The price of such growth for Soviet Russia under the world conditions of the modern era would be not only continued class war in rural districts, not only swiftly increasing unemployment, not only the steady submergence of all socialist industry by an expanding capitalism, but the complete dependence of this young Russian capitalism on the financial oligarchs of the imperialist world. Such, at least, was the analysis made by Stalin and the Communist Party in adopting in 1928 the now famous Five-Year Plan.

The Five-Year Plan proposed the rapid industrialization of the country, more rapid than any industrialization known in the world before. Heavy industry must first be built, the machines that make machines for other industry and for farming. Lighter industries to raise the standard of living must rapidly follow. Farming must be industrialized, not by strengthening a class of rural capitalists, but by the voluntary uniting of all non-exploiting peasants, beginning with the poorest, into collective groups farming their lands jointly with machinery which the developing state industry would supply. This was necessary to make farming modern, while giving the benefits of its modernization to all farmers. It was necessary to make Russia socialist, or even to preserve the half-socialism which the city workers had begun. It was necessary for the independence of the country and the very existence of the Soviet government. “We could not refrain,” said Stalin, “from whipping up a country which was a hundred years behind and which owing to its backwardness was faced with mortal danger.”⁵

In less than five years—for the Five-Year Plan was 96 per cent completed in four and a quarter years from October 1928 through December 1932—Stalin was able to announce that the former backward agricultural Russia had become the second industrial country in the world. The number employed in industry doubled from eleven million to twenty-two million. The volume of industrial output also doubled, from 15.7 billion rubles in 1928 to 34.3 billion in 1932 (calculated at prices prevailing in 1926-7); it was three times the pre-war production. At the same time a rapid industrialization of farming combined some twenty million tiny, uneconomic subsistence farms into 200,000 large collectively operated farms (by 1936 there were 250,000) based on machine power, scientific methods, division of labor. The relative proportion of industrial to agricultural output grew from 48 per cent at the beginning of the plan to 70 per cent at the end of 1932, thus changing Russia from an agricultural to a predominantly industrial country.

“Formerly we did not have an iron and steel industry. Now we have such an industry,” reported Stalin in January 1933 at the plenary session of the Central Committee of the Communist Party.

“We did not have a tractor industry. Now we have one.

“We did not have an automobile industry. Now we have one.

“We did not have an engineering industry. Now we have one.

“We did not have a big and modern chemical industry. Now we have one.

“We did not have a real solid industry for the production of modern farm machinery. Now we have one.

“We did not have an aviation industry. Now we have one.

“In production of electric power we were last in the list. Now we are among the first in the list...

“And we have achieved these enormous new branches of industry on a scale that makes the scale of European industry pale into insignificance. . . .” Such was only part of the success reported.

The Five-Year Plan cost heavily in dislocation of populations, exhaustion of youth, disorganization of harvests and many privations which attended the rationing of food and other commodities. But never in history was such an advance gained at less cost and certainly never so swiftly; and it was gained unprecedentedly without long-term credits or foreign loans. Had the pace been less swift, had the Communists postponed this breathless drive towards full industrialization, they believe that Soviet Russia would already have had “not pacts of non-aggression, but war.” “We would have been unarmed in the midst of a capitalist environment which is armed with modern technique.”⁶ The advance of Japan into Manchuria in 1931 and the stated intention of Nazi Germany to expand into Soviet Ukraine are warnings today which anyone may read of the fate which might already have overtaken the Soviet Union but for its swiftly rising economic and military strength.

With the conclusion of the first Five-Year Plan at the end of 1932, the Soviet Union plunged into the second. “We have already laid the foundations of a socialist society . . . and all we have to do now is to erect the edifice—a task which undoubtedly is easier,” said Stalin at the Seventeenth Party Congress in early 1934. Industry and trade were already 99 per cent socialized; three-fourths of agricultural production was socialized. On the base thus established, the second Five-Year Plan proposed to abolish “all private property in the means of production, all class distinctions, all exploitation of man by man."⁷ It proposed three times as much new construction as had been achieved in the first Five-Year Plan. It proposed a doubling and tripling of the standard of living through the final technical reconstruction of the whole national economy, the mastery of the most modern methods and the most complex machines.

Already as the year 1936 opens, it is clear that the second Five-Year Plan can be accomplished in less than five years. In the last months of 1935 the total monthly output of heavy industry was already five times as high as in 1928.⁸ Grain production has known three record harvests surpassing all pre-collectivization years. Rapid increase in the standard of living—more food, better clothing, expanding art and science—is evident in all parts of the country. Cotton pickers, sugar-beet growers, combined-harvester operators, timber workers, machinists and miners are descending triumphantly on Moscow to celebrate their achievements in production and win the plaudits of the land.

With hammer blows the figures of the 1935 achievements were given by Molotov in January 1936 to the Central Executive Committee. A 20.4 per cent increase in industrial production over 1934, in place of the 16 per cent planned; 23 per cent increase in freight car loadings, 45 per cent in raw cotton, and 43 per cent in sugar beets. A grain harvest running close to one hundred million tons, nearly ten million above the highest previous harvest; horses up 5 per cent, cattle 18 per cent, sheep and goats 25 per cent, hogs 38 per cent—all increases of a single year.

The abolition of the card system of rationing, reported Grinko, Commissar of Finance, had lifted the trade turnover from 60 to 80 billion rubles; the profits from socialist economy were 7.8 billion rubles; the planned state budget receipts had been exceeded and the planned expenditures cut, leaving a surplus for expansion. But the most important result of the year, said Molotov, was the Stakhanov movement “which leads to an entire revolution in industry and transport, and opens the first page of the great advance in socialist productivity of labor.”

Then, with confidence born of experience, Valery Meshlauk, head of the State Planning Commission, gave page after page of the carefully plotted future. “The 1936 plan provides for a further and accelerated upsurge of the whole national economy.” The increase set for large-scale industry is 23 per cent, a 15 billion ruble advance, which is greater than the entire output of this industry in 1927. The increase set for agriculture is 24 per cent, for commodity circulation 25, railway transport 19.8, capital construction 34.8. The financial income of the population is to rise from 101 to 118 billion rubles, in the face of steadily dropping prices. Social and cultural services in the central and local budgets are to rise from 16 to 21 billion, the social insurance alone from 6.7 to 8 billion. But darkly across this shining future run figures of army expansion, from the 6.5 billion planned to 8.2 billion actually spent in 1935 and 14.8 billion planned for 1936. For beyond the borders of the triumphantly planned growth of Soviet national economy lie the unpredictable dangers of the chaotic capitalist world.

If a map of the Soviet world could be drawn pictorially and changed with each changing year, it would show countless new cities arising on formerly barren land. It would show tens of millions of tiny, uneconomic farm plots merging into a rhythm of horizon-touching fields. It would show thousands of geological expeditions penetrating uncharted wildernesses to discover and chart nationally owned wealth. Following these there would flash across the scene surveyors, engineers, new railroads, steel plants, textile mills. New timber areas open, new coal and oil fields. If the map had a sound film attachment one would hear the summons sent forth to young Communists, to workers in the older, better-organized factories, demanding heroic personnel for the conquest of the wastes. The conquering march of man reaches northward to settle the Arctic and eastward to the wild coasts opposite Alaska. And a long green strip of a million and a half acres of new forest-zone moves steadily southward across treeless plains of Kazakstan as a mighty screen to protect the grain lands of South Russia from the desert winds of Asia.

For the past two years the Communist leaders have begun to speak of socialism as “victorious”; its economic base is secure.

Footnotes