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New Light on an Old Debate

(December 1961)

From International Socialist Review, Vol.23 No.1, Winter 1962, pp.22-24.
Transcribed &marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

The Soviet Industrialization Debate, 1924-1928
by Alexandar Erlich
Harvard University Press, Cambridge, Mass. 1960. 214 pp. $6.00.

The recent 22nd Congress of the Soviet Communist Party continued the demolition of the Stalin cult. However in its basic document, the Draft Program, it in fact reaffirmed the central myth of Stalinism: that it was the bureaucracy, and specifically the Stalin faction, which conceived the program of Soviet industrialization and carried it out against the opposition of Trotsky, Bukharin, Zinoviev, and the rest of the “anti-party elements” of the Bolshevik Old Guard who were to be exterminated in the purges of the thirties.

The reality, of course, was vastly different. Throughout the “Great Debate” of the 1920’s over the future of the Soviet Union, the clearest and most consistent proposal for rapid industrialization were put forward by the Trotskyist Left Opposition, while Stalin, for his part, denounced the Opposition as “super-industrializers.” But the debate of the 1920s on economic policy has an interest far greater than merely debunking the discredited Stalinist version of history. This debate, in which participants representing all viewpoints made serious and significant contributions, posed problems which even today continue to be crucial for the Soviet Union, and not the Soviet Union alone. Consequently, as Prof. Erlich rightly states, “ideas which reverberated through the Soviet Union three decades ago and which since then have been blackened, denigrated, and time and time again proclaimed dead, are now playing their part in one of the most significant developments of our time.”

The Soviet Industrialization Debate, 1924-1928 is above all a book about those ideas: an exposition and critical analysis of the economic theories and arguments advanced by the major protagonists. As such it is of very great importance – the first adequate treatment to appear in English. It is itself, moreover, a serious and valuable contribution to the discussion.

The ground for the debate was the economic situation of the Soviet Union in the early 1920’s, the beginning and middle period of the New Economic Policy. Institutionally, this period was characterized by the combination of a state sector containing all of heavy and most light industry, loosely controlled by the central government, with a largely uncontrolled private sector comprising virtually all agriculture and retail trade. From the standpoint of production this period was that of “restoration”: the gradual recovery of industrial and agricultural production to pre-revolutionary levels.

The Soviet economy had, of course, been completely debilitated by seven years of imperialist and civil war: at the start of NEP industrial production had fallen to a tiny fraction of its former volume, due to the disappearance of the labor force and of raw materials; the failure to make replacements or even repairs; and even some physical destruction. Agriculture was at a famine level, and the 1921 Kronstadt insurrection showed the refusal of the peasantry to continue feeding the cities while receiving nothing in return.

Starting from this abysmal situation, the NEP achieved speedy and substantial successes. But as early as 1923, long before the old level of production was restored, the basic problem of the Soviet economy became apparent in the “scissors crisis”: the tendency of industrial products to increase in price relatively to agricultural products. The startling symptom of this in 1923 was a seeming failure of peasant demand for industrial consumer goods, a “crisis of over-production.”

This crisis led to an immediate split within the Bolshevik party over the most fundamental questions of economic policy; a split in which the main spokesmen were, for the Right-Center-Majority, Rykov, and above all Bukharin, and for the Left Opposition Preobrazhensky and Trotsky. The majority moved to cut industrial prices sharply in order to stimulate peasant demand. The Opposition, condemning this as a mere palliative and a harmful one, called for the immediate beginning of a panned program of rapid industrialization. The debate quickly developed into a systematic and generalized confrontation between the two basic lines of development open to the Soviet economy.

The essence of Bukharin’s position, which remained the dominant conception of the Soviet government until its sudden overturn in 1928, could be summed up in the phrase “harmonious” or “balanced” growth. Because Russia was primarily a peasant country, the primary force for accumulation would have to be provided by the agricultural sector. In step with the growth of peasant production and of the peasant market, industry would be able to expand without causing problems either of oversupply or of inflation. Of course this evolution would involve an orientation of industry to consumer output, and in the countryside would imply considerable enrichment of the wealthier peasants (the “kulaks”). But the technical superiority of state industry and the growth of agricultural cooperatives would guarantee a general socialist development. The peasantry, including the kulaks, would “grow over” into socialism.

This is the economic basis of the “theory of socialism in one country.” In the 1923-25 period the Soviet Union achieved what seemed like significant economic advances under policies based upon it. But as Erlich points out, this theory was based on a projection into the future of the prevailing trends of the early NEP, and these trends could not possibly be continued. In the “period of restoration” the Soviet Union possessed the economic advantages of returning to a previous level: a large amount of unused or underused industrial capacity, and a vast backlog of peasant demand for the articles of prime necessity. Under these conditions substantial increases in industrial and agricultural output could be and were achieved with very small investments. But once the full capacity was in use, once the backlog of unpostponable peasant demand was used up, the Soviet economy came face to face with other backlogs of a less benign nature: the backlog of technological progress between 1913-26, forcing vast investments in order to use the modern technology; and the backlog of replacement resulting from the age and obsolescence of the capital stock, and demanding substantial investments even to maintain the given level of production. Thus Bukharin (who, according to the “testament” of Lenin, “never understood the dialectic”) suddenly found that a rate of investment at which there would be “balanced growth” had suddenly been transformed into its opposite, a rate at which stagnation or even retrogression might well take place, and that at best “we shall move forward at a snail’s pace.”

Preobrazhensky, on the other hand, from the very beginning understood the problems that were to trip up Bukharin. He maintained that the industrialization of the Soviet Union would require a period of “primitive socialist accumulation,” by which he meant a spurt of intensive and massive industrialization whereby Soviet industry would be modernized and expanded to the point where it could satisfy the basic needs of the country. A process of this sort, even in the absence of sizable foreign loans (due exclusively to the refusal of Western capitalists to invest in the Soviet economy) would require a sharp increase in foreign trade and a lasting integration into the world economy, the opposite of “socialism in one country.”

Preobrazhensky, of course, did not disagree with the concept of “balanced growth” – on the contrary, his entire argument is based on the necessity for balanced growth. The essence of his case was that the Soviet economy itself was totally out of balance. As Erlich puts it,

“His analysis brought out the gravity of such an imbalance in an economy with industrial equipment inadequate to absorb the available labor reserves even prior to its depletion, with millions of subsistence farmers hanging on the market by the skin of their teeth, and with foreign borrowing reduced to a trickle.”

The crux of the imbalance was the technological and economic inferiority of the Soviet Union in respect to world capitalism, which expressed itself in the higher cost of Soviet as against foreign goods. Only when this imbalance had been essentially corrected through accelerated industrialization would Bukharin-type “balanced growth,” in the form of a gradual equalization of industrial and agricultural growth rates, become both practical and desirable.

That “discontinuous growth” was the absolute prerequisite to the industrialization of the Soviet Union was ultimately admitted by all the opponents of Trotsky and Preobrazhensky: by Bukharin abstractly and reticently, by Stalin in the brutal practice of the 5-year plans. Nevertheless the Stalinist pattern of industrialization through totalitarian oppression of the working class and “military-feudal exploitation” of the peasantry in no way resembled the Trotskyist conception of “primitive socialist accumulation.” The key question for all except those who, as Erlich says, “have chosen to assume, in a quasi-Hegelian spirit, that discarded alternatives are by definition inferior to the adopted ones,” is whether the Preobrazhensky program in some form was practically feasible from an economic point of view, or whether it was only by Stalinist methods that “Primitive Socialist Accumulation” could be accomplished.

The Preobrazhensky program openly advocated a certain “exploitation” of the peasantry. To provide the exports required to import foreign capital goods, the means of subsistence required for a rapidly increasing working class, and the necessary raw materials, under the given conditions of hostile capitalist encirclement, the peasantry would have to turn over to the state greatly enlarged agricultural surpluses without receiving any immediate return through an increased flow of consumer goods. How were these surpluses to be obtained?

The Trotskyist position was unequivocal: “We can obtain grain,” Preobrazhensky wrote, “only be economic means.” These economic means were primarily maintenance of a monopolistically high price level for industrial consumer goods through reducing their prices only a fraction of any decrease in production costs, and encouraging the peasants to save.

Could these methods succeed? Erlich does not (and this is certainly a weakness) discuss the situation in a precise and quantitative way, or evaluate the statistical case presented by the 1927 Platform of the “United Opposition Bloc.” But he does present what he calls “relaxation possibilities,” numerous ways in which rapid industrial growth could be reconciled to the limited investment resources available, and which in fact were emphasized quite strongly by the Right-Center spokesmen Bukharin and Bazarov. His conclusion is quite categorical: for the Soviet economy of the 1920s, “An expansion path which would be bold and realistic as well seemed within the reach of the possible.”

But such a path was not to be taken; instead heavy industry was built up rapidly indeed, but only at a frightful cost in every other sphere of economic and social life. Why did Stalin adopt the disastrous policy of forced collectivization? Here a “pure” economic analysis is of little use: the decisive factors were obviously political and social.

On this point Erlich merely indicates the beginning of an answer. Stalin, he contends, could not rely on “economic means” because the rich peasants would be willing to cooperate only if the Communist leaders were willing “to earn the good will of the upper strata of the peasantry by opening up for them avenues of political influence”: and this Stalin could not do because it would undermine the monolithic political structure and endanger his own hard-won power by evoking “a bitter resistance on the part of the radical elements in the working class and of the young intelligentsia.”

But this, while indubitably correct, merely poses the question in another way: could the anti-Stalin Bolsheviks have succeeded in applying “economic means” or would they have been forced to imitate Stalin?

The crucial point here is that the fundamental issue in dispute between Trotskyists and Stalinists was precisely the question of socialist democracy. Stalin, political spokesman for a rising bureaucracy whose interests required a monolithic, totalitarian political structure, not only could make no major political concessions to the kulaks, but was even more adamantly opposed to such “concessions” to the rest of the population. For the Trotskyists, on the other hand, the essence of the matter was the democratic rights of the workers. Correspondingly, for the Opposition the struggle against the power of the kulaks had to be based, not on state compulsion, but on the agricultural laborers and poor peasants. Far from fearing to “open up avenues of political influence” to these strata, the Opposition proposed, not mere’y favoring the poor and middle peasants economically, but, politically, called for “the formation of active non-party cadres of the agricultural workers, the poor peasants, and the lower layers of the middle peasants.” On a political basis of this sort, why could not the socialist government count on the cooperation of the peasants for an economic policy of which they would ultimately be principal beneficiaries?

The industrialization debate of the 1920’s, so accurately and interestingly presented in Erlich’s book, is thus seen to have a contemporary relevance going far beyond the solution of technical economic problems. Workers democracy was even then the key to an effective and socialist path of industrialization – and today the revolutionary re-establishment of workers democracy remains a vital necessity for the Soviet Union to succeed in building a genuinely socialist economy.

December 10, 1961

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