An Outline of the Economic Problems in the History of the Soviet Union

The eventual downfall of the USSR has often been seen as a self-evident example of the failure of central planning, both as a principle and especially in practice. The critics of the USSR also point to the low standard of living of the population during its existence, the prevalence of famines, the low availability and shoddy quality of consumer goods, and its continued lagging behind the United States in production as more proofs of the failure of ‘socialist construction’. Although these criticisms are not entirely without merit, they need to be contextualized and qualified strongly to be properly understood. It is therefore important to provide a rough outline of the economic history of the collapse of the USSR and its meaning. Because the focus of this article is on the economic problematic, more detail than is usual will be presented about these issues, whereas some political, cultural and social developments of importance will be largely avoided.

Czarist development patterns
There is no doubt that Russia, although already behind the Western European level of development since the late Middle Ages, had in the late Czarist period had been industrializing. In 1990 dollars, the income per head in Russia was $749 in 1820, and this rose as a result to $1488 in 1913.(1) Notwithstanding this, it was not catching up compared to the more developed parts of the world; in fact, it lagged behind more in 1913 than in 1820, since the speed of industrialization was low and the vast majority of the population never saw its benefits. The abolition of serfdom under Alexander II, passed in 1861 and 1866, destroyed the basis of feudalism in the Russian countryside, although in a manner as beneficial to the nobility as possible while tying them to the new state-led development of capitalism along absolutist lines. This was achieved by compensating them for all freed serfs in government bonds, paid for in first instance by extra taxes laid upon the villages.

Therefore, the emancipation of the serfs was in essence a forced purchase of manumission on the part of the village commune, the mir, resulting in heavy overtaxing of peasants and subsequent restriction of their mobility. This hampered the development of any local capitalism, and concentrated all capital at the top.(2) By not freeing the peasants from their legal subservience to the peasant commune, it also reinforced the power of these communes, which had two possible outcomes: either, as Marx considered in the 1870s, the communes themselves could become the basis for revolutionary transformation of Russia if they rose against the Czarist government, or, as Lenin suspected, they would become an unbearable fetter to the capitalist development of agriculture in Russia and lead to disappropriation of most peasants belonging to it to the benefit of a lucky few traditional leaders, in the style of the enclosures in Scotland (where clan chiefs did this) and elsewhere.(3)

The latter possibility prevailed in practice, although but slowly. Urbanization increased in Russia, so that in 1913 75% of the population were peasants c.q. farmers, and 14% was urban; in 1850, only 7% had been urban.(4) Still, this is not a major change. The share of agriculture in estimated GDP declined from 59% in 1885 to 51% in 1913, and in the same time the share of industry increased from 6.6% to 14.9%.(5) One can therefore conclude that although capitalism was slowly developing in Russia, the emphasis is on slow, and that there is little evidence for Czarist Russia being anywhere near achieving a modern industrial level for a nation of even those times, let alone one of today. The main reason for Russia’s inability to develop more on the basis of capitalist industrialization was not, as Lenin and others were ready to assume, the mir as such. On the contrary, productivity in this primitive collective-based agriculture increased markedly in the period after liberation from feudal restraints, which if anything shows the capacity of collective farming to perform in both market and non-market settings (about which more later on).(6) Russia’s integration into the then fully developed world market of the late Victorian age could have hindered its development, but the Russian government was prudent enough to apply a significant tariff system in order to enable local industry to grow without being crushed by British and German competition. The non-state-led industry however concentrated itself around light industry processing cotton textiles, both because of the relative low capital costs in this domain and because the Czarist government wished to emphasize agricultural production in Central Asia.(7) The latter served presumably to strengthen its grasp on only relatively recently conquered lands.(8) Cotton and wheat were therefore the main agricultural products, and Russia benefited from a boom in both sectors during the 1900s.

State-led growth prevailed in more capital-intensive industry, in particular focused on railroad building, which was used as the vehicle for industrialization in Russia as it was elsewhere. Military considerations will have played a role here in a country as large as imperial Russia, but it was primarily important for allowing the countryside to be linked to the world market, in particular in wheat – similar processes took place in competing countries such as the United States and Canada. The result however was not more development, but a strong exacerbation of existing contradictions. Of itself, railroad investment has a secular boom-bust nature as if it were a stock bubble – which in places such as the US it indeed often was. This is true even for state-led investment since the marginal returns from extra investment in (railroad) infrastructure drops rather quickly in countries like imperial Russia, with a few very developed zones and extremely spread out (and therefore expensive to cover) underdeveloped zones. As a result, it did not serve well enough to develop the large underdeveloped areas, and its contribution to economic growth dropped precariously as new investment halted in the 1910s. Extra investment was not feasible as maximum yields by standards of technology prevalent in the day had been reached.(9)

Overall, the outlook was rather bad for Russian development even in 1913. The level of education was appallingly low, with only 38% being literate, comparable with Brazil and Mexico in those days, and for example 70% in Japan.(10) The average person had had no benefit from the little industrialization that had taken place. Yields and prices had increased in agriculture, benefiting a small group of farmers, but there was an enormous surplus of farm laborers whose incomes and productivity were low and yet were not released out of the mir structure. There was not sufficient industry for them to become proletarians in the cities yet, and the Stolypin reforms, intended to individualize land ownership in Russia and create a conservative class of smallholders, failed because the large amount of poor peasants and farm workers resisted the creation of greater inequality in the countryside. The serfdom reforms had taken from many peasants their traditional land claims in any case and had concentrated the landownership of the nobility, so that most peasants could not become farmers even if they had wanted to, and were completely dependent on the collective land tenure system. As a result, real wages for the Russian workers and peasants did not significantly increase over the period of Czarist industrialization, unlike those in most of Western Europe during the same period. In that regard, Russia lagged behind with outdated social structures and resulting low wealth levels up to a very late point in historical time; comparable with Spain, and it is telling that both these countries as a result saw great revolutionary turmoil.(11) One can therefore conclude that the prospects of increase in wealth by following the Czarist course were not good, especially given the later collapse in agricultural prices in the 1920s. Differentiation in agriculture, as predicted by Lenin, would most likely have led to the noble landowners being substituted or complemented by a small number of individual large farmers, who were withdrawing from the communes after Stolypin’s reforms, with very large numbers of poor peasants and landless farm laborers remaining. The living standards of the latter would have been particularly dire given the failure to develop a systematic industrialization policy, fixing them at subsistence incomes in unproductive roles on the land, with credit market discrimination preventing any ‘bootstrapping’ out of it on their own strength. One can see such patterns of development in places like India and Brazil today.(12)

The Revolution and War Communism
The Bolsheviks took power in 1917 under the slogan of “peace, land and bread”. Their main support groups were the soldiers, weary of World War participation for imperialism, the proletariat of Russia, small but significant politically, the huge poor peasantry and landless farm workers mentioned above. These groups respectively were addressed by the slogan: peace for the soldiers, land for the peasants, bread for the workers. Slogans, however, are just that, and actually implementing policy to achieve them is much more difficult. The new Soviet Russia, henceforth USSR or Soviet Union (officially only from 1923 on), first had to cede huge amounts of land to Germany and subsequently a lesser strip to Poland in order to achieve peace, and had to ward off a multitude of foreign invasions and domestic reactionary incursions during the period of Civil War (roughly 1918-1921) to even control the land. By that time, the poor peasants and farm laborers had already seized the land on their own account, pre-empting any land policy of nationalization or redistribution on the part of the newly minted government. As a consequence, that government’s ever pragmatic leader, Lenin, simply ratified the results in first instance.(13) But there was little for any new government to work with in any other sector either. The landowning class and nobility might well have disappeared entirely, but so had most of the actual proletariat, which was largely destroyed in the war and by the subsequent Influenza epidemic which mercilessly struck a world weakened by war. In 1917 there had been three million industrial workers in Russia – there were barely one million of them left in 1920, with most having died from war or famine and the rest having been ‘repeasantised’ by fleeing to the countryside.(14) Industry had been largely destroyed also. Output of large-scale industry had dropped to 13% of its pre-war level, and of iron and steel to 4%, while foreign trade had essentially ceased entirely.(15) Worse, inflation had become so rampant that most distribution of what little was produced happened by means of barter, despite the Soviet government’s repeated attempts to stabilize the currency.(16)

This, combined with the lack of income in the cities generally, led the peasants to refuse trade with the urban areas. Famine already stalked the land, and during and directly after a period of civil war the peasants were more inclined to hoard any surplus for safety’s sake than to undertake the dangerous trek to market their wares, rational enough especially given the prevalence of robbery and the destruction of much infrastructure.(17) The result would have been the total eradication by famine of the urban population of the USSR. A great famine in 1920-1921 already made the reality of this situation quite urgently clear, when millions died of hunger and disease. Therefore, Lenin c.s. decreed the policy of ‘War Communism’ and taxed peasants in kind on their food surpluses to distribute this to the cities. The peasants of course resisted and in several places undertook revolts, so that the new government had to resort to significant force to extract the taxes. Nonetheless, the policy worked and the cities were saved.(18) A central role in this played the policy of razverstka, that is the use of a quota system on collective peasant units for delivery of the grain tax, as opposed to attempting to maintain total control over grain production as in the monopoly. This went together with registration of activity (uchet) in the countryside, relying on the cooperation of the Poor Peasants’ Committees, so that the state could know what was going on and recapture control over agriculture.(19) Any planning was seen as hopeless before the food situation was resolved and registration implemented.(20)

Nonetheless, the peasants stubbornly resisted the quota system, and as a result the Xth Congress of the Party had to relax the food tax system significantly in March 1921. There is lots of evidence that this policy, much like the low rationing policies for urban workers and other such measures, were seen as forced on the Soviet government and were not, contrary to the claims of conservative historians, a conscious policy of terror against the populace to cement power. As one official put it, when confronted with the claim that rations were too low for workers as well as peasants:

“What do you think, the People’s Commissariat of Food does this for its own satisfaction? No, we do it because there is not enough food.”

(21) The extreme inflation encouraged speculation and hoarding as well. The result of this was a development, out of ‘War Communism’, of the retreat called the ‘New Economic Policy’.

The transition to NEP
It is important to emphasize that it was a retreat. The year 1921 had seen, besides the end of the Civil War and the restoration of control over the countryside at the expense of any swift building of socialism, the infamous Kronstadt Revolt. This was in a way the pinnacle of the series of peasant revolts that had periodically confronted the Soviet government with the impossibility of any policy of socialist reconstruction in the countryside on the short or even medium term. The Kronstadt sailors were mostly peasants, often Ukrainians, enlisted in the Soviet Navy to replace or supplement the many dead of WWI and the Civil War, but Kronstadt also had a strong proletarian core.(22) The revolt itself mostly concerned the constant deprivations, as well as the reliance on state administration of the economy without building socialist economic structures (as opposed to cultural-social ones) at the expense of local Soviets. Many different types of workers had, in the chaos of the Civil War and the many dislocations, sensibly set up local soviets for their own branch of industry or work to govern that branch – precisely the railroad workers being a prime example. Lenin and his government attempted to nationalize these sovietized branches as soon as possible, mostly as a transition measure to re-coordinate the economy and so repair the dislocations caused by war and internal refugee flows.(23) These actions at the expense of the local soviets in a Soviet Union were, understandably, considered a species of betrayal by certain segments of the population. The enduring misery in the countryside also played a major role here, and most of the demands were of a peasant nature.(24) The Soviet government also recognized this, with Bukharin speaking of “erring brothers” and Lenin stating they represented the viewpoint of the “petit bourgeois popular masses” who resented the costs of the Revolution, without opposing the Revolution or the Bolsheviks as such (which indeed no evidence indicates they did). Therefore, given the impossibility to give in to their demands, and yet the understandable nature of the claim, we as well as the Bolsheviks themselves can agree with the analysis of historian Paul Avrich on Kronstadt:

[it] presents a situation in which the historian can sympathize with the rebels and still concede that the Bolsheviks were justified in subduing them. To recognise this indeed is to grasp the full tragedy of Kronstadt.


Under such pressure, it is no surprise that the Soviet government conceded a loss of faith in the initial hopes of constructing socialism from the get-go. Large-scale production was maintained as state production, and was to form the basis of socialism at some uncertain future date, but private property and trade were to rule in agriculture. The result was the creation of a big class of ‘middle farmers’ which were the most self-sufficient in terms of smallholding capitalism and therefore not very inclined to marketing food to the cities. If industrialization were to succeed over time, demand for food would increase strongly from the cities and this would lead to very problematic terms of trade: the so-called ‘scissors crisis’.(26) The truth of these dire predictions was confirmed as throughout the NEP period the marketization of food never went beyond 16-17% of output, which had been 25% at the 1913 level.(27) In the meantime, industrial managers had the right to hire and fire at will, creating once again a full labor market under NEP. Individual commodity production, including the farmers, represented 75% of the population consistently throughout the 1920s; less than 18% worked in the state-owned but commodity-oriented industry.(28) Even unemployment existed to a significant degree, some 13-14% of the employed labor total in the NEP period.(29) The state industry was organized into groups of profit-maximizing trusts, although subject to restrictions of a strategic-political nature.(30)

That all of this was far shy from socialism in the economy was completely obvious to Lenin himself, whatever other commentators and politicians later on may have said. It is profitable, given the confusion that has reigned on the topic of ‘state capitalism’, to emphasize that the wholly capitalist structure under the aegis of a Communist government, termed ‘state capitalism’, was both pointed out and defended at some length by Lenin:

Let me also remind you of the arguments I had with the “Left Communist” group in 1918, after the conclusion of the Brest-Litovsk peace. Those who were in the Party at the time will remember that some Communists feared that the conclusion of the Brest Peace would disrupt all communist policy. In the course of the argument with these comrades I said, among other things: State capitalism is nothing to fear in Russia; it would be a step forward. That sounded very strange: How could state capitalism be a step forward in a Soviet socialist republic? I replied: Take a close look at the actual economic relations in Russia. We find at least five different economic systems, or structures, which, from bottom to top, are: first, the patriarchal economy, when the peasant farms produce only for their own needs, or are in a nomadic or semi-nomadic state, and we happen to have any number of these; second, small commodity production, when goods are sold on the market; third, capitalist production, the emergence of capitalists, small private capital; fourth, state capitalism, and fifth, socialism. And if we do take a close look we shall find all these relations in Russia’s economic system even today. In no circumstances must we forget what we have occasion to see very often, namely, the socialist attitude of workers at state factories, who collect fuel, raw materials and food, or try to arrange a proper distribution of manufactured goods among the peasants and to deliver them with their own transport facilities. That is socialism. But alongside is small enterprise, which very often exists independently of it. Why can it do so? Because large-scale industry is not back on its feet, and socialist factories are getting perhaps only one-tenth of what they should be getting. In consequence, small enterprise remains independent of the socialist factories. The incredible havoc, the shortage of fuel, raw materials and transport facilities allow small enterprise to exist separately from socialism. I ask you: What is state capitalism in these circumstances? It is the amalgamation of small-scale production. Capital amalgamates small enterprises and grows out of them. It is no use closing our eyes to this fact. Of course, a free market means a growth of capitalism; there’s no getting away from the fact. And anyone who tries to do so will be deluding himself. Capitalism will emerge wherever there is small enterprise and free exchange. But are we to be afraid of it, if we have control of the factories, transport and foreign trade? Let me repeat what I said then: I believe it to be incontrovertible that we need have no fear of this capitalism. Concessions are that kind of capitalism.

It is therefore clear that the NEP operated on a consciously capitalist basis as a strategy for creating a period of recovery and to dampen peasant/farmer resistance. A result was also a strong increase in the inequality in the countryside, as in some regions the top 10% of the peasantry possessed up to 45% of farm implements and 30% of farm animals, whereas the lowest 30%, the poor peasants, owned only 5%.(32) The richest category were in first instance described as “entrepreneurs”; but the tide started turning against the NEP strategy of accumulation in agriculture, despite some vigorous defenses by Bukharin, since the internal terms of trade were not favorable for investment. The subsequent ‘scissors crisis’ was a crisis caused by the investment funds for state industry drying up because the industrial goods could not be sold at terms sufficient to finance new investment, as demand was low due to the crash in agriculture prices. Therefore, the tone over time in the 1920s became more hostile against this class, and they came to be described as kulaks (with the middle farmers being called batraks, incidentally). What Bukharin presented as a victory, the increase of the rich and middle farmers, was increasingly seen as a source for worry.(33)

Finishing the NEP
It was felt by some, representing the ‘Left’ in the subsequent debates, that NEP went too far on the capitalist road and that this hindered the industrial development of the country, which was seen as necessary for creating wealth as well as a whole new proletariat. The latter had become an important consideration also as the diffusion and lack of class consciousness and struggle within NEP became increasingly clear. The old proletariat, as mentioned above, had mostly been destroyed; most of society were now smallholders and so-called ‘NEP-men’, petty traders and speculators of all kinds. Needless to say, this was not a very pleasant basis for any government to build a socialist society on, and Moshe Lewin’s description of the NEP society as a “quicksand society” is therefore justified.(34) The NEP system’s permissive policy even toward things like kulaks leasing extra land to tenant farmers increasingly became seen as encouraging counterrevolution, and the ‘Right’ in the industrialization debate, represented mostly by Bukharin, lost ground. Between 1926 and 1928, when Soviet politics was torn by the leadership struggle following Lenin’s untimely death, the time for the ‘Great Turn’ had come: the ‘Left’, with Stalin eventually at its head, had won the debate.

From 1926 on, an immediate range of measures was taken with an eye to preventing recurrence of the ‘scissors crisis’ and at the same time making a serious start with ‘socialist construction’, which was conceived by all participants as consisting in industrialization and the subsequent economic development. As Lenin himself had once described Communism as “soviet power plus electrification”, and he had been a great enthousiast for Taylorism and industrial efficiency as yardstick of performance, it can hardly be said that this of itself was a change of course. But there was a new sense of urgency about it, initially spurred on by the continuing backwardness of the USSR and the little progress made since the Revolution. The aforementioned ‘scissors crisis’ and the continuing lack of marketization of food, with even grain exports being merely 33% of the prewar level, as well as the 9% unemployment had made it clear that such modernisation had to be imposed from above.(35)

The question remained how to achieve this. As mentioned, the ‘Right’, mainly Bukharin and Sokolnikov, had defended using agricultural surpluses obtained from slowly self-enriching farmers for industrial investment, but this policy now seemed bankrupt (quite literally). The middle position was taken up by Bazarov, head of Gosplan, among others: he proposed to invest mainly in light industry, hoping the low costs of such investment would make its scope sufficient to lift off the economy. The ‘Left’ position of Preobrazhensky and to a lesser degree Trotsky held that all potential surplus within agriculture should be funneled to investment in heavy industry, like one would remove the foam layer on a glass of beer. Making an analogy to Marx’s description of the origins of capital, Preobrazhensky described this as ‘primitive socialist accumulation’; incidentally again confirming the capitalist terms in which the debate took place.(36)

Most historians of this debate, and it has indeed been much discussed in the literature, have been very sympathetic to the ‘Right’ in this discussion (leaving aside those who reject the possibility of the USSR improving on Czarist Russia altogether). Nonetheless, as R.W. Davies justly remarks, after summing up some of the considerations in the academic debate on this topic:

(…) We do not believe that NEP was capable of sustaining much higher rates of industrialization than those achieved on the eve of the First World War. On this view, judgment about the long-term economic viability of NEP depends on a political assessment of how far it was essential for the Soviet Union to establish powerful capital goods and armaments industries in the space of a few years.


Introducing the planned economy
Precisely this would now become an issue. In 1929, the Wall Street crash took place, and the world economy took a nosedive. As a result, all liberal capitalist nations scrambled to maintain their position at the expense of the rest within the imperialist web, and international politics quickly heated up. With tensions rising to the point seen just before World War I, all countries with sensible governments started preparing for the worst. This was also the case with the USSR, now ruled by Stalin after he defeated and exiled his main opponent, Trotsky.

From 1928 on, the impetus to make a serious job out of industrialization, as building block of creating socialism in a state-capitalist society, took form with the declaration of the first Five Year Plan (1928-1932). The main course of this plan was to emphasize above all investment in heavy industry. The school of Preobrazhensky, so to speak, had developed a model in which heavy industry would have an effect analogous to the Keynesian idea of the ‘multiplier’. Investment in heavy industry in a capital-scarce country like the USSR not only works as investment for industrialization as such, but has the added effect that the product of this industry is precisely that, more capital goods (in the non-Marxist sense). Therefore, every marginal additional investment in heavy industry in the longer run leads to more then proportional increase in available capital goods, leading to a positive feedback cycle. Industrialization would spur more industrialization. The main catch was, of course, that the more monomanic this policy was applied, the more effective it would be over the longer run: therefore, it created strong governmental incentives, once the Preobrazhensky plan was adopted, to hold down investment in consumer goods as much as possible. Any funds invested in heavy industry itself would at some indefinite later point permit more than proportional extra consumer goods investment, once the heavy industry-led industrialization policy was relaxed and the funds shifted from heavy to light industry. The consequence was that for the generation coming up under Stalin’s rule, the socialist future would have to be built at the expense of their current living standards, at least in terms of consumption. It was sacrificing the present for the future.(38)

There was however also a second consideration, namely one of a military kind. Stalin’s prescience on the point of the upcoming threat of war against the Soviet Union has been often quoted, in particular in the context of the immense urgency of industrialization, for which he was prepared to (almost literally) sacrifice everything and everyone else. There are two quotes by Stalin himself which well outline the intent of the new planned economy in the USSR and the Five Year Plan(s) in particular as a means of structuring such an economy. First, Stalin outlined the goals of the first Five Year Plan from the point that we just left our chronological description:

The fundamental task of the five-year plan was to transfer our country, with its backward, and in part medieval, technology, on to the lines of new, modern technology.

The fundamental task of the five-year plan was to convert the U.S.S.R. from an agrarian and weak country, dependent upon the caprices of the capitalist countries, into an industrial and powerful country, fully self-reliant and independent of the caprices of world capitalism.

The fundamental task of the five-year plan was, in converting the U.S.S.R. into an industrial country, to completely oust the capitalist elements, to widen the front of socialist forms of economy, and to create the economic basis for the abolition of classes in the U.S.S.R., for the building of a socialist society.

The fundamental task of the five-year plan was to create in our country an industry that would be capable of re-equipping and reorganising, not only industry as a whole, but also transport and agriculture—on the basis of socialism.

The fundamental task of the five-year plan was to transfer small and scattered agriculture on to the lines of large-scale collective farming, so as to ensure the economic basis of socialism in the countryside and thus to eliminate the possibility of the restoration of capitalism in the U.S.S.R.

Finally, the task of the five-year plan was to create all the necessary technical and economic prerequisites for increasing to the utmost the defence capacity of the country, enabling it to organise determined resistance to any attempt at military intervention from abroad, to any attempt at military attack from abroad.

(39) We will come to the collectivization of agriculture later, but first we must consider the military aspect, as the development aspect has already been touched on. It is a famous and often-quoted fact that in 1931, Stalin pointed out that they had, according to his lights, precisely ten years to catch up 50-100 years of industrial development, or “they will crush us”.(40) As a result, military hardware, by nature part of heavy industry, was strongly emphasized in the industrial plan, with defense spending increasing 28-fold between 1930 and 1940, several times more than the already impressive gains in other sectors of industry.(41) This tie-in between heavy industry and military spending would be a consistent pattern in Soviet central planning policy from that point on, in particular after 1945, as will be explained. In this sense, the USSR can be said to have developed the first truly ‘military-industrial complex’.

What did the Preobrazhensky strategy entail? We have outlined it somewhat already, but more detail is needed, as it would be the blueprint for all central planning policy for the rest of the Soviet Union’s existence. Two main views came together in the policy’s theory. The first was the positive feedback loop of heavy industry, already mentioned, which was developed by the Gosplan economist of the ‘Left’, G.A. Feldman. It is important to emphasize here that the plan itself did not provide for necessary reductions in consumer goods production, just pushing down investment in consumer goods industry (light industry). In fact, one of the main points of Feldman’s model of the two-sector economy, split between a producer goods section and a consumer goods section (a common model of production dynamics that was already used by Marx himself), was that there would be a spillover effect from the producer goods or capital goods sector to the consumer goods sector. This would allow consumer goods production to increase by utilizing the greater stock of capital goods available in absolute terms, without the need for proportionately greater investment increase. As long as reinvestment in the capital goods sector did not rise above 50%, there would in fact never even be a sacrifice of consumption, but for greater reinvestment rates, a (small) initial sacrifice was modelled that would lead to significantly greater benefits in the longer run, although this run would certainly amount to 10+ years.(42)

The question was where to get the initial investment funds, and here Preobrazhensky devised his strategy of ‘primitive socialist accumulation’ by in essence squeezing as large a surplus as possible for investment in heavy industry out of the countryside. Japan followed this same policy in their period of development by instating a severe direct land tax, and so directly exploiting the peasantry for industrialization in a manner that was difficult for peasants to evade, unlike things like income and indirect taxes.(43) Preobrazhensky however rejected this strategy, as it would lead to a direct break with the peasantry, and the USSR was politically committed to improving their lot. His suggestion of an indirect consumption tax was considered too easy to evade, especially since NEP had already led to the development of a lively black market, and besides, there was much anger over letting the resistance and nonparticipation of the middle and rich farmers hinder the industrialization plans. Therefore, an alternative had to be devised which would do away with these problems. This alternative, developed by Stalin, was the collectivization of agriculture.

The collectivization of agriculture
The collectivization of agriculture was a solution in two ways. First, because there was vast ‘hidden unemployment’ in the countryside due to the many smallholders and middle farmers and their labor-intensive but relatively unproductive mode of agriculture, which prevailed after the seizure of land by the mirs, as described above. The collectivization of agriculture allowed mechanization to proceed at a much more efficient pace, by combining the land into huge collective farms. Each thirty or so collective farms had one Machine Tractor Station (MTS) to provide the necessary modern farm equipment as soon as the new industrialization made this available (with the initial stock being imported from the United States).(44) Although NEP-era total agricultural production had not been much worse than in comparable land in the US or Canada, it was as mentioned relatively very labor-inefficient, and collectivization meant to do away with this. In turn, this would imply the creation of the desired new proletariat to form the basis for the new Soviet society, as the huge masses of labor ‘freed up’ by this policy would not go to rural unemployment, as happened in many capitalist countries after the so-called ‘Green Revolution’ (45), but could instead be applied to work in the new industries, as well as providing housing to enable the consequent urbanization.(46) Indeed, by creating a new proletariat in the industrial cities, some of which were entirely new themselves, Stalin’s government could be fairly assured of a sturdy base of support, unlike the difficulties Lenin c.s. had found themselves in after the Civil War. At the same time, the reduction in numbers of the peasant farmers and their herding into collectives would enable a much greater degree of control over their activities, and curtail their ability to resist state economic policy, in particular on the point of marketization of produce. It is no coincidence therefore that the “intensification of the class struggle against the kulaks” went hand in hand with the new collectivization policy.(47)

The initial collectivization policy went fairly well, with about a million people collectivized vaguely voluntarily by 1929. Stalin had decreed a grain tax per collective unit, whether traditional peasant village collectives or kolkhozy, to avoid the direct confrontation with all peasants a direct land tax would entail, as mentioned above. From 1929 however, the pace was speeded up to an extreme degree, as the Central Committee of the party pushed for ever higher industrial targets and therefore ever faster demanded the creation of the new fundamentals for ‘primitive socialist accumulation’. The mass collectivization program was very poorly planned and organized, with chaos and force reigning. When in 1930 60% of peasants had been forced into the collectives, Stalin called a halt to the push by publication of his well-known article “Dizzy with Success”.(48) As a result, collectivization levels dropped again to some 25% during the same year.(49) However, the same ‘relaxation’ did not apply to the war against the kulaks: their “liquidation as a class” was announced. This did not mean that they were all to be murdered, as the indication “as a class” implies, but Stalin aimed to break any possible long-term potential for resistance by spreading them out. The known opponents of collectivization were sent to the newly enlarged camp system, the GULAG, and the rest were either degraded in status by redistributing their land or were involuntarily resettled as peasants on virgin lands, usually in Kazakhstan and similar areas.(50) Following this offensive, other peasants were also forbidden to leave the collectives; the reduction in collectivization had clearly not been intentional. Over the course of 1932 and 1933 the peasants were once again pushed back into the collectives, this time lastingly, with 85% of the land being cultivated by collective farmers by 1933.(51)

As might be imagined, the collectivization along these lines, i.e. forced and high-speed, was extremely unpopular among probably all peasant classes. The main form of retaliation was once again resistance by passive means, mainly by destroying livestock, horses, and by refusing to work. This even took the form of large-scale collective work refusals of those already on the collective farms. Of course, this led on the part of the Soviet government to bad memories of the narrow escape from total famine during the end of the Civil War. It is therefore no surprise that Stalin immediately suspected large-scale sabotage. As he wrote to the novelist Sholokhov:

the esteemed grain growers of your region (and not only your region) carried out a sit-down strike (sabotage!) and would not have minded leaving the workers and the Red Army without bread. The fact that the sabotage was quiet and apparently harmless (bloodless) does not alter the fact that the esteemed grain growers were basically waging a ‘‘quiet’’ war against Soviet power. A war by starvation, dear com. Sholokhov…”

In 1931 and 1932, there were, by accident of weather, very poor harvests. This, combined with the prior large-scale passive resistance of the peasants, led to the inexorable result: equally large-scale famine. There has been much discussion in the academic literature as to whether this famine was intentional policy or not on the part of Stalin’s government. The claims of Robert Conquest and other Cold Warriors both as to scope and intent with regard to the famine have been roundly debunked, but there is still some margin of discussion on whether the repression of the kulaks also involved deliberate starvation. Nonetheless, we can point out the basic elements agreed upon by the modern consensus. There is little to no evidence that the famine itself was intentional, or part of any policy by the Soviet government. It is also true that they were neglectful in combating it, and that there was significant resentment on the part of the government against certain sections of the famished population in the agricultural areas (mainly the Ukraine and Kazakhstan), since they were suspected of having caused it themselves by their ‘sabotage’. In this context Stalin agitated against ‘idlers’ and ‘class enemies’ who had brought it on themselves.(53) Nonetheless, as Davies & Wheatcroft pointed out among other places in their classic study of the 1932-1933 famine(54), the Soviet government did attempt to mitigate the effects of the famine; although they were “too little too late”.(55) The collectivization policy itself also had certain penumbras that turned out to be quite lethal given the extreme circumstances. These were in particular the interruption of crop rotation, the prohibition on internal migration from the agricultural areas, and the policy to pay for additional industrial investment by exporting grain; especially since Ellman estimates the exported grain could have fed five million over the period of one year, if optimally distributed.(56) Although Ellman weighs and rejects a charge of genocide, particularly against Ukrainians (57), it is clear that ‘Team Stalin’, although by Davies & Wheatcroft acquitted of mass murder, is certainly liable for mass manslaughter as a result of gross neglect and haste.(58) That is not to say that Ellman is right to suggest that it was inherent in Communist policy, because of the doctrine of class struggle or belief in ‘historical progress’, to disregard the humanitarian aspect of famines.(59) Indeed, when during the Civil War the famines of that period struck the Volga area as a consequence of the White Armies’ struggle, Lenin appealed to the Ukrainians themselves for help:

This year, the Ukraine, west of the Dnieper, has had an excellent harvest. The workers and peasants in the famine-stricken Volga area, who are now suffering hardships only a little less severe than the dreadful calamity of 1891, look to the Ukrainian farmers for help. Help must come quickly. Help must be abundant. No farmer must refrain from sharing his surplus with the starving Volga peasants who have no seed with which to sow their fields.

Let every uyezd that is well supplied with grain send, say, two or three peasant delegates to the Volga to deliver the grain, and to see for themselves the terrible suffering, want and starvation, and tell their fellow-countrymen upon their return how urgently help is needed.

Chairman of the Council of People’s Commissars,
V. Ulyanov (Lenin)

August 2, 1921


Results of the collectivization of agriculture and the Five Year Plan
The human costs having been considered, now we must concern ourselves with the economic meaning of the collectivization of agriculture. The mechanization of farming introduced on an ever-larger scale and the subsequent expulsion to industry of agricultural labor led to a great drop in the productivity of remaining labor in the farm collectives, as the best labor left for better prospects. The result was that, as Robert Allen phrases it, “collective farms became employers of last resort, providing a meager subsistence to women and children, the old and infirm”; this meant that in a sense the goal of creating the new proletariat and destroying the peasant resistance had been achieved.(61) Output was not systematically greater. However, the other main goal, that is to increase marketization, also succeeded. The initial period of collectivization itself, 1928-1932, saw small drop in marketization, but it increased greatly over the 1930s, reaching 89% above the 1928 level by 1939.(62) A significant factor in this was not just the greater state control, but also much higher prices as a result of the creation of direct collective-to-urban sales on farmers’ markets, which had free prices and therefore immediate inflation. What consumer goods were produced did not increase nearly as much in price, so the terms of trade for remaining peasants actually increased, and with it their purchasing power.(63) After the fiasco of the famine, the state also created an indirect turnover tax after all, finishing implementation of the Preobrazhensky plan entirely; it financed its investments mainly from taxing the direct farmers’ sales, so that the peasantry did not see a great increase in standards of living, but neither did they lose much in economic terms.(64)

In the meantime, the industrialization itself was a massive and unqualified success. Machinery output increased elevenfold between 1928 and 1937. Economic growth was maintained at 5.3% per year between 1928 and 194; the Soviet economy increased its entire estimated GDP by 78% in 12 years. The Stalinist industrialization was faster than any country in the history of the world, including the so-called ‘East Asian miracle’.(65) As a result of the inflation of food prices, real wages tumbled in the urban areas, but as a result of industrialization the Soviet government strongly encouraged the full participation of women in labor, leading to total real wage being about even to slightly less.(66) It highly important for understanding Soviet politics to note that this applies to people already living in the industrial cities; for the millions of peasants-turned-proletarians, the urbanization move actually implied a significant increase in the standards of living. This is not to even mention the immense improvements in healthcare and education. Already by 1926, the literate population had been increased to 51%; but by 1939, this was 81%. At the end of the second Five Year Plan, in 1939, there was virtually nobody in the cities who had not had high school education.(67) The consequences for women in particular were remarkable. Although Stalin’s government banned abortion and emphasized motherhood, presumably in yet another attempt to sacrifice socialism-in-the-here-and-now for industrialization, the result of widespread women’s education was a great drop in fertility. Since the death rates dropped significantly, despite the ravages of collectivization and the later purges, the USSR in this period also made the necessary transition from a high-birth and high-death society to a low-birth and low-death society, characteristic of the developed countries.(68) Labor productivity also significantly increased during this period as more people were drawn from underproductive work in agriculture to productive work in industry, and women were brought in, with as result the abolition of consumer rationing in 1935 (although this does not mean consumer goods were necessarily widely available, given the conscious policy of low priority for them, and there was also a harvest failure in 1936 that led to breadlines).(69) Also, the lower real wages does not imply that consumption itself dropped, and therefore the concrete results of the standard of living, even for those already urbanized (as mentioned above). State officials were paid better, as were the intelligentsia, in particular schoolteachers and the like, to support the education policies. The introduction of state farms (sovkhozy) also allowed some of the worst-paid agricultural labor to get level with the rest of society.(70)

As a result, equality increased greatly, development went extremely rapidly, health and education indicators massively improved, and the standard of living of large specific groups also increased or remained equal. It is this that explains how, despite the massive application of state repression in the 1930s following the collectivization debacle and perceived threats to the state and its leadership, significant segments of the population supported Stalin and his government. As with all governments, his rule could not but rest on certain classes of society, and in his case these were the many peasants-turned-proletarians, as well as the state administrators and the ‘new intelligentsia’, plus those who had been unemployed in the 1920s. These groups gained the most under Stalin and had the most to defend.(71) On the other hand, the main opposition should be sought, aside from direct political rivals, in the peasant classes remaining, particularly the formerly richer ones, as well as former traders and other ‘class enemies’, plus of course the many who were for some time imprisoned in the GULAG or simply executed. Also likely opposed were many of the various ethnic minorities that were often savagely repressed and deported by Stalin’s government. (72)

There is not much point in this article to go into the political aspects of the mass repression or into WWII, nor the role the GULAG played and so on, as these have little bearing on the problematic of central planning and economic policy. It must be noted just formally that the forced labor of the GULAG played an insignificant role in the production statistics of the USSR for this period; with the exception of a slightly larger, but still small, role in the production of nonferrous metals. Although GULAG policy was to send as much as possible only males deemed fit for work, the whole undertaking probably cost more than it gained the USSR in economic terms, never mind the human cost. Convict labor generally, including the often lethally hard work on canal building and such, represented 2% at the most of total labor.(73) What remains of some residual importance is that in the GULAG system too ‘productivism’ reigned over all other considerations, with great human costs, and doing significant damage to the reputation of the same socialist system for which it was a means to an end. As Robert Allen summarizes it, collectivization played a mixed role, with its positive strategic effects in terms of marketization and urbanization being mostly mitigated by the great damage of its overly hasty and violent implementation, whereas the GULAG system and mass terror, from an economic perspective, added nothing at all. These crimes hang as a dark cloud over the otherwise vigorous upward climb represented by the Stalin-era industrialization policies.(74)

Post-WWII development: residual successes
Although the Soviet Union emerged victorious from the Second World War, having destroyed the Nazi-settlerist invaders (contributing 80% of all European theater combat), its losses were stupefyingly large. GDP and population dropped by about 20% total, as about 25 million Soviets were killed, civilian and military alike.(75) A large famine swept the land in 1946, as it did all of Europe, and destroyed another million or so people. Nonetheless, Soviet industry had been saved by evacuation to the inland, and the Soviet economic system proved remarkably resilient on its own. Even though the war had destroyed 70.000 villages, 1.700 cities, 32.000 factories and 40.000 miles of railroad track so making another 25 million people homeless (76), the economy recovered remarkably quickly. Already in 1948 it recovered its prewar level (although this still implies a loss of a decade’s worth of industrialization, and this at an extremely high pace of growth).(77) By 1950, capital goods production was about equal to the 1940 level, and consumer goods production exceeded it by 8%.(78) Once again central planning showed its strengths, especially since unlike Western Europe and Japan, the USSR received no large sums of foreign investment.

However, agriculture lagged behind significantly, not in the last place because of the consequences of the ‘scorched earth’ policy and the enormous loss of farm manpower as a result of world war casualties. In the last years of Stalin’s reign, grain production per capita was lower than it had been in 1913, and overall grain production was 14.7% lower than in 1940.(79) When after Stalin’s death power passed to the collective around Nikita Khrushchov, it was clear to the government that agricultural policy had to change. The new government decided to allocate its resources more efficiently, first by releasing the great mass of GULAG prisoners: this number dropped from approximately 5.2 million in 1953 to about one million in 1959, within which the number of political prisoners dropped from 580.000 to 11.000 respectively.(80) Aside from the political capital invested in de-Stalinization, including of course the famous so-called ‘secret speech’, the new government mostly paid attention to developing the badly lagging agricultural sector. The main way of doing this was the ‘Virgin Lands campaign’, which diverted a significant amount of investment into developing the lands of Kazakhstan, southern Siberia and the area around Astrakhan. Prices for agricultural products were also systematically raised as a production incentive, with the aim of making farmworkers less dramatically behind urban citizens in living standards. Although the costs were high, with investment in agriculture increasing two and a half times in the period of five years (1953-1958), there was some significant output growth as well. Output increased between 1950 and 1960 by 55%, twice the average growth rate of the entire period since central planning was introduced, and three-quarters of the new production came from the Virgin Lands. (81)

Additionally, Khrushchov invested strongly in housing, pensions, and other ways to improve the standard of living, with considerable success. Although few of these investments were of a type to have lasting consequences in terms of economic transformation, it must be noted the standard of living had never been as high in the area covered by the USSR before, and also considerably above those in developing countries.(82) Education was a major concern as ever, and the amount of pupils taking full education (that is, up to 17-18) increased from 1.8 million in 1950-51 to 12.7 million in 1965-66. Similarly, the amount of university students trebled in this period.(83) Equality was also larger than ever before, with Khrushchov’s reforms also levelling the lower and upper layers of the state bureaucracy more. One would say: so far, so good.

Post-WWII development: its nature, failures and problematics
But there were many dark spots on the horizon. To properly understand this, we must first recap the situation in terms of labor as it was after Stalin’s death, and as it would stay, mostly unchanged, for the rest of the existence of the USSR. Within agriculture, production took place mainly through the large kolkhozy and sovkhozy, supplemented by private production plots, the produce of all of this being sold at market prices at the farmers’ markets, after subtraction of the state quota. In essence, this means there was a simple ‘free market’ system of distribution in agriculture, with the specific oddities of having an enforced collective ownership of the means of production and a heavy state income tax. As a result, peasants’ freedom of movement was restricted, but not their sales, and it is indeed difficult to even speak of ownership of means of production if one is not allowed to leave them or switch jobs, except to go into industry. Since investment in agriculture was paid for by the state, and the cost of this (partially) borne by the produce quotas, in essence there was a simple labor market structure, but a very restricted one and with the state acting as capital.

Similarly, wage labor was mostly free with the abolition of most forced labor tasks, although here too there were significant restrictions. There was a labor market also, although wages were partially limited by state directives. Nothing in these restrictions is, however, incompatible with state-guided or -controlled capitalism. Again, the initial goal had been the creation of a new proletariat after the destruction of the old one, and at all times, as Marx has pointed out, has the creation of a wage working class required force and restrictions.(84) It is no coincidence that for the USSR this period coincided with that of ‘primitive socialist accumulation’, just like it did in prior developed capitalist countries such as England.(85) It is worth pointing out also that because the wage form was mostly piece wage and there were no independent trade unions during this process, the intensity of labor was very high and working hours long.(86) Of course, living standards were vastly higher than for most proletariats during the same period in their development through accumulation, and the government was extremely ideologically committed to their well-being, at least in theory. It is nonsense to say that it made no difference at all in terms of governmental regimentation of the workers and farmers; even aside from the extreme speed of development, its distribution was much more egalitarian and much more in favor of things benefiting the masses such as education, healthcare, affordable housing and so forth than was the case in a country like the UK or the US during the Industrial Revolution, or even Taiwan or Japan during their period of boom. Nonetheless, the state capitalist nature of the basis for building socialism caused problems in the longer run, as became evident from the later 1960s. The Soviet Union went into decline, and this had a number of causes.

The first was the militarist aspect. The continuing threat of war, this time from the United States and its imperialist allies, loomed like a threatening specter over the plans of the Soviet government. In 50 years, the USSR had been attacked a great number of times by a great variety of different countries, and lost tens of millions of people to its defense. Especially after the introduction of nuclear weapons, it should therefore come as no surprise that the Soviet governments successively demanded great investments in the military. The problem with military spending is that warfare is about absolute parity in arms rather than proportional spending, since the lethality of a bullet or rocket does not depend on its price. Since the USSR, despite its great catching-up work, still had a smaller GDP than the United States, it was forced to spend a greater percentage of its GDP on ‘investment’ in military expenditures. Although this spurred on some otherwise dreadfully rare cases of advanced indigenous R&D in the Soviet Union, including some spectacular achievements in rocketry, it was not productive from the point of view of long-term economic investment, especially since unemployment was already practically nonexistent. This was however not the fault of the Soviet government, but of the powers that constantly threatened it (including, eventually, China).

That same issue also became a problem in a more general sense. Chattopadhyay has very usefully pointed out how Marx analyzed the trajectory of capitalist accumulation as first being based on the absolute method of surplus value creation, by means of maximally pressing the workers and the length of the working day, the intensity of labor and so forth, and by proletarianizing ever greater parts of the population; but eventually this method must end for want of more labor and more expansion possibilities, and capitals switch to the relative method, which proceeds by technological changes to increase productivity per worker and to replace living labor with dead labor.(87)

There was precisely such a move in the Soviet Union, particularly as the government also ran into limits on its natural resources. Although there was a minor boom in the 1980s from rising oil prices, overall the costs of new investment in resources massively increased, with ever more far-fetched plans being developed for exploration in Siberia, with investment returns being often extremely negative. Additionally, with the limits of labor and resources as inputs for quantitative expansion reached, the purely quantitative expansion-based production plans failed to accordingly switch to R&D investment and implementation of new technologies in production to improve productivity. Instead, they relied strongly on retooling and repair of old factories and institutions, with ever increasing costs and ever decreasing returns on investment.(88) There was planning for cost reduction and R&D investment, but it was almost entirely concentrated in military R&D. Even upkeep programs sometimes failed as a result: such as the returns on the Virgin Lands, which fell significantly as a result of underinvestment after the government switched ever more to military expenditures. Similarly, many extremely expensive investments in oil and gas had to be undertaken for military-strategic reasons rather than economic rationales. In these and similar manners, the outside military pressure created a militarist system which distorted production and diminished greatly the potential of the central plans.(89) Again, although this is to be ascribed significantly to the incompetence of the planners, the main fault for these developments is the Cold War atmosphere and the military threat, real or perceived, from the outside.

Concluding remarks
The degree of militarism that had developed over time is clear by the manner in which Brezhnev and successors had no serious plan other than military posturing and investments, and let civilian investments essentially collapse. When Gorbachov, certainly an imaginative man, attempted to reduce the burden of military expenses, the military old guard attempted a coup against him, thereby destroying the USSR in the process. By that time however, the USSR had already fallen seriously behind in the growth race, having for the first time been overtaken by nations such as Japan and South Korea, which invested in new industry based on high technology production.(90) What is, or ought to be considered worse, is that during the struggle for development all real desire to achieve socialism seems to have been forgotten. Indeed the rhetoric from the government did not lessen, but successive governments were ever more worried about their geopolitical strategic position and ever less about transforming the relations of production, until they even managed worse at transforming production than liberal capitalist states did (the United States for the first time achieved higher growth rates in the mid-1970s).

This of itself ought not to be blamed, however, on the central planning system. On the contrary, Robert Allen emphasizes that his conclusions are quite the opposite. Having put in all the known data on the economic growth, inputs and trajectories of Czarist Russia, the NEP period, and the subsequent central planning system, and even comparing the central planning system with collectivization to a model without, he has come up with convincing and suggestive results. The capitalist path performed by far the worst, contra Paul Gregory, and did not achieve anything near the results by 1939 of what the other systems did; in fact, the model predicts a drop in performance from 1938 on as the hard budget limit of a capitalist government precluded new investment. ‘Pure’ NEP (i.e. with no central planning but purely Soviet-controlled market capitalism), if it had been continued, performed initially quite well, better than the real plans, but over time lost ground and could not match the real take-off from about 1935 on. Only the collectivized and actual versions of the real plan performed as spectacularly (whereby the difference is engendered by extraneous variables, such as the purges, etc.).(91) As Allen himself concludes from his models:

These findings point toward three important conclusions about institutions and Soviet economic development. First, the NEP (…) was a conducive framework for rapid industrialization. Collectivization made little additional contribution to this system of organization. Second, the autarchic development of the producer goods sector was a viable source of new capital equipment. Exporting wheat and importing machinery (…) was not necessary for rapid growth. Third, the central planning of firm output in conjunction with the soft budget restraint was effective in mobilizing otherwise unemployed labor. This additional employment made a significant contribution to output as well as distributing consumption widely. On a more general level, the NEP already contained many socialist elements such as the public ownership of industry. The development of central planning and the soft budget constraint during the 1930s further shifted the economy towards socialism. These changes also accelerated the development of the productive forces(…)


It should be clear then that central planning itself was not the cause for the collapse of the USSR politically or economically, and that it is not true either that central planning is incompatible with long-term development or with increases in productivity. Output per worker more than doubled between 1928 and 1950, and again more than doubled between 1950 and 1968.(93) It was the military threat that forced the hand of the successive Soviet governments to disinvestment in militarization, and it was the incompetence at understanding and applying the lessons of Marxist analysis of capital accumulation to their own situation that did in the Soviet leaders in the long run. It may be that this was caused by the mistaken impression that their society was based on non-capitalist relations, or that somehow capital accumulation for development purposes already was equivalent to changing the mode of production. This is a misconception. Indeed, it is important to keep in mind that planning of itself means nothing – many capitalist states resort to extensive planning methods as soon as they are confronted with a major war situation (which of itself indicates how empty their talk of the inherent failures of planning is). This does not make them less capitalist. Stalin was therefore entirely and wholly on the wrong path when he claimed in 1936:

Thus the complete victory of the socialist system in all spheres of the national economy is now a fact. And what does this mean? It means that the exploitation of man by man has been abolished, eliminated, while the socialist ownership of the instruments and means of production has been established as the unshakable foundation of our Soviet society. (Prolonged applause.) As a result of all these changes in the sphere of the national economy of the U.S.S.R., we now have a new, socialist economy, which knows neither crises nor unemployment, which knows neither poverty nor ruin, and which provides our citizens with every opportunity to lead a prosperous and cultured life.


It is perhaps this which eventually caused the Soviet leadership to make their main and primary error: to mistake development as a means to an end, that is, as a way to make socialism more viable and easy, for development as an end in itself, which for Communists it is not and can never be. After all, if that were the goal, why not just become imperialists and wage war until you get what you want? It worked for the colonialists, the settlers and the exploiters! The attitude of ‘productivism’ is one of accumulation for accumulation’s sake, and is therefore a capitalist attitude. All the contingent errors of the investment policies and so forth aside, this is the core error that underlies the collapse of the Soviet Union: not the idea of central planning, but mistaking development by central planning as a way towards socialism for the goal of socialism itself. As we have seen, Lenin still realized the nature of the state that had been created, but this was lost out of view afterwards in the great drive for developing the state. Understandable enough, but with disastrous results for the country and for socialism in the long run.

Yet there may still come another day when we can mend these errors. The attack on central planning as ‘obviously’ inherently flawed is analogous to the attacks on Communism itself as ‘obviously’ inherently flawed; the more intelligent critics, such as Hayek, have therefore combined the two into one. But Communism is not dead. Here, perhaps, it might too be appropriate to cite Stalin on its fate, given the great meaning, positive and negative, his policies have had for the current views of socialism:

People have a bad custom (…) to commend the living (…) but to consign the dead to oblivion, as idols, as was said in olden times, or as leaders, as they say now; to commend, to express sympathy for them as long as they have not died, but when they die, to forget them.


For Stalin this has been true, even for the Soviet Union this has been true – let it not be so for Communism itself.

(1) Robert C. Allen, Farm to Factory (Princeton, NJ 2003), p. 21.
(2) Ibid.
(3) See: V.I. Ulyanov (Lenin), The Development of Capitalism in Russia [1894]. Cf. Marx’s comments on the disappropriation of the peasantry by the Duchess of Sutherland.
(4) Paul Bairoch, Cities and Economic Development: From the Dawn of History to the Present (Chicago, IL 1988), p. 290.
(5) Allen, p. 25.
(6) Allen, p. 29.
(7) Allen, p. 31.
(8) It is worthwhile to remember that for example the Turkmen capital of Geok-Tepe was only taken after siege in 1881.
(9) Allen, p. 35.
(10) Allen, p. 36.
(11) Allen, p. 39, 43-44.
(12) Compare India’s development pattern with its equilibrium trap between feudal and capitalist relations for most small farmers. See e.g.: B.R. Tomlinson, The Economy of Modern India (1860-1970) (Cambridge 1996), p. 89.
(13) Allen, p. 48. In the process, the peasants also undid most of the Stolypin enclosures.
(14) The lack of (food) provision and protection on the part of the state often led the remaining proletarians to become mobs fending for themselves, with loss of class consciousness. See: Siegelbaum & Suny, Making Workers Soviet (Ithaca, NY 1995), p. 15-16.
(15) R.W. Davies, Soviet Economic Development from Lenin to Khrushchev (Cambridge 1998), p. 23.
(16) R.W. Davies, The Development of the Soviet Budgetary System (Cambridge 1958), p. 26-28.
(17) The situation has an analogy in the so-called ‘Hunger Winter’ that struck the occupied Netherlands in 1944-1945. Most food and means of transport had been looted by the German occupier, and as a result, the urban citizens starved while the farmers hoarded. The Netherlands is a relatively smaller country though, and infrastructure was less affected overall, so that many urban people succesfully made a harrowing trek by foot or bike to the local countryside to barter family jewels for food. My own grandfather was one of the young men sent for such tasks.
(18) Germany also followed a policy of state grain monopoly at the time, and the Provisional Government in 1917 had also already been forced to resort to similar measures. This therefore disproves the motive of the policy being any specific Bolshevik hatred for peasants etc. See: Lars Lih, “Bolshevik Razverstka and War Communism”, in: Slavic Review, Vol. 45, No. 4 (Winter, 1986), p. 674.
(19) Lih, p. 676.
(20) As Bukharin and Preobrazhensky put it in the ABC of Communism [Moscow 1920], “fulfillment of this task [of laying the foundations for a planned economy] begins in practice with an uchet.” As cited in Lih, p. 676.
(21) P.G. Kaganovich, as cited in Lih, p. 678-679.
(22) Paul Avrich, Kronstadt, 1921 (Princeton, NJ 1970), p. 54.
(23) Allen, p. 48-49.
(24) Avrich, p. 168.
(25) Avrich, p. 6.
(26) Allen, p. 50.
(27) Davies 1998, p. 27.
(28) Paresh Chattopadhyay, The Marxian Concept of Capital and the Soviet Experience (Westport, CT 1994), p. 156.
(29) Chattopadhyay, p. 157.
(30) V.N. Bandera, “The New Economic Policy (NEP) as an Economic System”, in: The Journal of Political Economy, Vol. 71, No. 3 (Jun., 1963), p. 271.
(31) Lenin, “Report on the Tax in Kind”. Collected Works Vol. 32 (Moscow 1965 [1921]), p. 286-298.
(32) Carr & Davies, Foundations of a Planned Economy 1: 1926-1929 (Harmondsworth 1974), p. 138.
(33) Bukharin cited in Carr & Davies, p. 139.
(34) Moshe Lewin, The Making of the Soviet System (New York, NY 1985), p. 221.
(35) Davies 1998, p. 27, 30.
(36) Davies 1998, p. 33.
(37) Davies 1998, p. 37.
(38) This idea of sacrificing the present for the future, in some views inherent in Marxism, has been target of philosophical critiques by liberal thinkers. Andrzej Walicki in particular has focused his attack on Marxism on this sore point. For more on this, see his exchange with Bertell Ollman: “Marx and Freedom”, in: New York Review of Books Vol. 31:4 (March 15, 1984). It is however outside the bounds of this article to go into the philosophy of Marxism and its politics.
(39) I.V. Dzugashvili (Stalin), “The Results of the First Five-Year Plan. Report to the Joint Plenum of the C.C. and C.C.C., C.P.S.U.(B.), January 7-12, 1933.” Works Vol. 13 (Moscow 1954).
(40) Davies 1998, p. 58. Indeed, the German invasion of the USSR, ‘Operation Barbarossa’, happened precisely ten years later.
(41) Davies, Harrison & Wheatcroft, The Economic Transformation of the Soviet Union, 1913-1945 (Cambridge 1994), p. 299.
(42) Allen, p. 56.
(43) Ragnar Nurske, Problems of Capital Formation in Underdeveloped Countries (Oxford 1953), as cited in Allen, p. 60-61.
(44) Davies 1998, p. 57-58. Carr & Davies, p. 213.
(45) Allen, p. 77.
(46) Indeed the urban population increased between 1926 and 1939 from 26 to 56 million people, only 18% of which through natural growth. See: Davies 1998, p. 47. Housing nonetheless was a significant area of underinvestment, leading to harsh circumstances in the new industrial cities. There, too, present comfort was to be sacrificed for heavy industry. See: Allen, p. 95.
(47) Allen, p. 98.
(48) Ibid.
(49) Alec Nove, An Economic History of the USSR (London 1990), p. 150-166.
(50) Allen, p. 99.
(51) Ibid.
(52) Stalin, letter to Sholokhov (6 May 1933). Cited in Michael Ellman, “The Role of Leadership Perceptions and of Intent in the Soviet Famine of 1931 – 1934”, in: Europe-Asia Studies Vol. 57, No. 6, (September 2005), p. 824. Ellman also points out that Stalin was considered right in suspecting ‘sabotage’ even by the peasants themselves; Ellman 2005, p.824n10.
(53) Michael Ellman, “Stalin and the Soviet Famine of 1932 – 33 Revisited”, in: Europe-Asia Studies, Vol. 59, No. 4, (June 2007), p. 665.
(54) The Soviet government allocated extra grain to the afflicted regions and reduced their quotas somewhat. Davies & Wheatcroft, The Years of Hunger (Basingstoke 2004), p. 183-185.
(55) Ellman 2007, p. 673.
(56) Ellman 2005, p. 835. Ellman 2007, p. 679.
(57) Ellman 2007, p. 690.
(58) Ellman 2007, p. 681.
(59) Ellman 2005, p. 832. He follows Robert Conquest in this analysis. See: Robert Conquest, The Harvest of Sorrow (London 1986), p. 234.
(60) Lenin, “Appeal To The Peasants Of The Ukraine”. Collected Works, Vol. 32 (Moscow 1965), p. 503.
(61) Allen, p. 100.
(62) Allen, p. 101.
(63) Ibid.
(64) Allen, p. 102.
(65) Allen, p. 102-103.
(66) Davies 1998, p. 46. Women constituted 39% of the workforce in 1940.
(67) Ibid.
(68) Allen, p. 113-114, 124-125. For the ‘fertility trap’ of underdeveloped countries that the USSR in this manner avoided, see: John Bellamy Foster, The Vulnerable Planet (New York, NY 1999), p. 16. For the dual role of women and their status vis-á-vis men, see Erik van Ree, The Political Thought of Joseph Stalin (London 2002), p. 133. Unfortunately this essay has no room for going into the gender aspect in more depth.
(69) Davies 1998, p. 54. Food quality and diversity nonetheless greatly improved in the mid-1930s, and things such as ice cream and ‘frankfurters’ became available on a mass scale, which had never been seen before. See: Sheila Fitzpatrick, Everyday Stalinism (Oxford 1999), p. 90-91.
(70) Allen, p. 149.
(71) Fitzpatrick, passim.
(72) For more on this, see: Oleg Khlevniuk (ed.), The History of the Gulag (New Haven, CT 2004, tr. Vadim Staklo).
(73) Allen, p. 108.
(74) Allen, p. 108, 110, 173.
(75) Richard Overy, Russia’s War (London 1998), p. 287-288.
(76) Overy, p. 291.
(77) Allen, p. 189. Davies 1998, p. 64.
(78) Davies 1998, p. 66.
(79) Ibid.
(80) R.W. Davies, Soviet History in the Yeltsin Era (Basingstoke 1997), p. 183.
(81) Davies 1998, p. 69.
(82) Allen, p. 189. Davies 1998, p. 69-70.
(83) Davies 1998, p. 70.
(84) Chattopadhyay, p. 63.
(85) Chattopadhyay, p. 62.
(86) Chattopadhyay, p. 65.
(87) Chattopadhyay, p. 66-70.
(88) Allen, p. 198-211. Chattopadhyay, p. 72-73.
(89) Allen, p. 209-210.
(90) For more on comparisons with Japan, see Allen, p. 201-202, 204, 211.
(91) Allen, p. 154-171.
(92) Allen, p. 171-172.
(93) Allen, p. 209.
(94) Stalin, Problems of Leninism (Beijing 1976), p. 799-800.
(95) R.H. McNeal, Stalin: Man and Ruler (London 1988), p. 235.


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