Stalin's Russia: Capitalism without capitalists?

Submitted by Anon on 30 March, 1998 - 1:27

“When I use a word... it means just what I choose it to mean”
Humpty Dumpty in Alice through the Looking Glass, by Lewis Carroll.

History is full of hybrid and exceptional formations which cannot be slotted tidily into one category or another” writes Martin Thomas in Workers’ Liberty 43. I heartily agree. Why then does Martin devote so much energy to attempting to do just what he cautions against — slotting the hybrid, exceptional, formation that was Stalin’s USSR into a tidy category of “State Capitalism”?

I think the answer lies in the in-built tendency that we all have to explain the unfamiliar by reference to the familiar. This is not in itself a terrible thing, but it can become an obstacle to developing human knowledge, if when confronted with something new, we so twist and redefine our concepts that they lose their original meaning and purpose.

It is my contention that the argument developed in Stalinism and State Capitalism so twists the meaning of the words capitalist, capital, law of value, surplus value, profit, wage labour and accumulation that it is difficult to see how Martin could consider any society that could possibly have developed on the basis of twentieth century industrial technology (with the partial exception of a workers’ state), to have been anything other than capitalist. This artificial widening of the meaning of words leaves us with a very neat and tidy, if somewhat nebulous, Grand Unified Theory of State Capitalist Industrialism. Unfortunately, it provides no understanding whatsoever of the class nature of the Stalinist counter-revolution in Russia.

I am not arguing that no State Capitalist societies exist, or that State Capitalism is somehow theoretically impossible, or that we can prove that the USSR wasn’ t capitalist by deductive reasoning using quotes from Capital. My argument is that in attempting to make Stalinist Russia fit the State Capitalist label, Martin is forced to invert all the real relationships in society and present them in a mystified form. Compulsory labour becomes free, accounting becomes accumulation, the black market becomes the law of value, the physical liquidation of capitalist classes becomes the moment of victory for capital, and so on.

In order to establish my argument we must first look at the character of the counter-revolution in Russia. For the revolutionary left, the enigma of Stalin’ s Russia has centred on the fact that the counter-revolution did not take the direct, open capitalist form that all the Bolsheviks assumed it would. The understanding — developed, by Trotsky in the mid twenties — of the bureaucracy as a centrist force, balancing between the two basic class camps, with the workers on the one hand, and domestic and international capital on the other, proved to be radically mistaken. After Stalin’s initial political victories, and the enunciation of the
ultra-nationalist dogma of “Socialism in One Country” in 1924, the opposition considered the main danger to come, not from the bureaucracy itself, but from the rural petty-bourgeoisie, the Nepmen (capitalist traders and merchants), elements of the old regime, the exiled former capitalists and landowners, and behind them international capital. It was expected that, under the impact of the class struggle, the bureaucracy would split and disintegrate, with one wing helping to organise the capitalist counter-revolution, while the other sided with the workers and the great majority of peasants. As we now know, things turned out very differently.

The actually existing counter-revolution

What actually happened from the end of the twenties to the mid-thirties was that the bureaucracy was able to act as an independent force and to crush both the working-class left and all spores of capital inside the USSR. The reason it could act in such a decisive manner was twofold. Firstly, due to the world slump, international capital found itself in an extremely weak position. It was not able to provide the huge financial aid necessary to rebuild a capitalist economy in the USSR, thus making an openly pro-capitalist split-off from the bureaucracy unlikely. This is decisive. It conditioned everything else. Secondly, the disintegrating, centrifugal forces unleashed in the USSR by the economic and social crisis in the late twenties created a political vacuum which the working class proved incapable of filling and which could not easily be filled by international capital.

In these concrete conditions, the collective state bureaucracy (which exists in different forms, in all the different kinds of class regime) proved itself to have far more capacity for adaptation and independent action than had previously been displayed by any other bureaucracy, even that in the primitive tribute-gathering societies that Marx called “Asiatic Despotism”. Acting in a decisive manner, wiping out its rivals on the left and the right, the collective bureaucracy was compelled to act like a ruling class, and so became a ruling class. The parasite devoured what still remained of its host. The bureaucracy did this, not in order to conform to some abstract, a-historical tendency to bureaucratism (though concrete tendencies in that direction do exist in capitalism), but because they were compelled to protect their increasingly insecure caste privileges.

There are two important interlinked points to note here. Firstly, in a protracted series of small one-sided civil wars the central state bureaucracy would make itself the sole master of the surplus product. In this process, Stalin made himself sole master of the bureaucracy. The result was a system with its own peculiar self-limiting set of contradictions. Secondly, the creation of this new system was premised on the liquidation, imprisonment or marginalisation of all the human beings who, as a class, were the conscious collective bearers of the self-expansion of capital. In other words, all the capitalists and proto-capitalists were either liquidated or denuded of their property. It is this fact that causes problems for those who wish to describe the system as State Capitalism. Even in the fetishised world of capital, social relations do not exist independently of the human beings who personify them.

Atomisation and the contradictions of bureaucratic planning

So, what were the social relations? Martin is quite right to describe the society created by Stalinism in the USSR as atomised. The interesting question is: did this atomisation bear any relationship to the basic form of atomisation in capitalist society, which is a product of commodity fetishism?5 Did relations between human beings in the social organism take the form of relations between things? Was the cash nexus the basic social bond? Or was the atomisation that existed in the USSR something very different from the individualism — and abstract equality — that exists in the societies that we would all agree to call capitalist? Again, to put the same question from a different angle, were the class relations direct ones of personal dependence, and obvious to all those concerned, or were they mediated through commodity exchange?

In all class societies, labour is in the last instance forced. The specific form in which this compulsion is enforced provides the key to understanding the nature of any particular society, which from the economic point of view, is simply a social organism for regulating the supply of labour to different tasks. In his most general statement about what underlies and determines the nature of class and the state, Marx put the issue like this: “The specific economic form in which unpaid labour is pumped out of the direct producers determines the relationship of rulers and ruled...upon this is founded the entire formation of the economic community... It is always the direct relationship of the owners of the conditions of production to the direct producers — a relation normally corresponding to a definite stage in the development of the methods of labour and social productivity — which reveals the innermost secret, the hidden basis of the entire social structure...” (my emphasis)

The “innermost secret” of the Stalinist social structure was that the workers were directly obliged to provide their labour-power as a service to the state or face imprisonment, exile, slave-labour, or death. This compulsory labour service was, of course, a variant of alienated labour, but it was supplied without the mystified capitalist form of a free exchange between private individuals as commodity owners. Performance of this labour service to the state was a condition of citizenship (or, more precisely, a condition of subjection, as in the sovereign-subject relationship). The system lacked an autonomous “economic” mechanism for controlling labour — as exists under capitalism. Political and economic relations, sovereignty and ownership were fused. The ties uniting social labour were thus ones of direct personal dependence.

The prime instrument for the overall social control of this compulsory labour was the repressive state apparatus, rather than the supervisory or superintendent role of the enterprise managers within the workplaces, who were themselves at the mercy of the secret police and the political power. Control was not exercised through the the reserve army of labour,the army of unemployed whose existence creates insecurity and exerts and down pressure on wages — a mechanism which Marx considered an essential condition for capital accumulation.

Within the normal functioning of the system, the workers had little possibility of collective resistance, and were thus far more atomised than under capitalism. This is because capitalist relations of individualised economic estrangement create the conditions for working class organisation in the form of trade-union bargaining over the price of the commodity labour power. The Stalinist system, on the other hand, was characterised by the permanant presence of the predatory state in every aspect of people’s lives. Elementary trade unionism was treason. Working-class self organisation thus had a much more directly revolutionary dynamic.

The purpose of the specifically Stalinist form of atomisation was to maintain the stability of an extremely crude and potentially highly unstable mechanism for surplus extraction and appropriation. The central bureaucracy would attempt to appropriate a surplus from the production units, via the control of supplies of raw materials, means of production and labour. The managers of the units, would in turn, attempt to minimise the exactions imposed on them by the centre and hoard supplies. The workers would resist as best they could attempts by the managers to take control of production, and thus of the actual process of surplus extraction. The centre had to make do with appropriating a surplus the extraction of which they did not control. The result was a system that looked at from a narrow economic point of view — i.e. from what has been called the relations in production — tended towards stasis, and lacked any powerful self-sustaining dynamic. What dynamism there was arose as a characteristic of the state itself, emanating from “outside” production, namely, the capacity of the central bureaucratic rulers to launch frantic attempts at economic mobilisation, backed up by state terror.

Atomisation in the USSR was maintained through a range of institutions and measures; the omnipresent secret police, which had representatives and agents in all enterprises, the police system of passport controls, observation via neighbourhood organisations, the apparatus of labour management — especially, the labour books and personal files, the militarisation of large sectors of production, and finally, the state monopoly of all forms of communication. This range of controls was facilitated by the giganticism of production units, and the close-knit nature of life in apartment blocks. Hundreds of thousands of people were employed in the KGB and its predecessors, perhaps as many as 1,650,000 at its peak. This is vastly more than the numbers — usually a few thousand — employed by the secret police in capitalist states characterised by fascist or military dictatorship. Hillel Ticktin has provided a useful outline of the history and function of this organisation.

“Until Gorbachev, the tasks of the KGB included prevention of all kinds of demonstrations, deterring the formation of any groups, surveillance of all kinds, and information gathering on the state of public opinion. In principle everyone was watched. Nor was the KGB unsuccessful in its tasks. There were few if any public demonstrations, groups were quickly broken up, strikes and mass stay-at-homes were relatively rare, and when they did occur they were dealt with quickly. Censorship was effective at all levels. For the above purposes the secret police has maintained a presence in all enterprises and institutions. It needed to know of and deal with any individual who was dissident. Dissidence includes differences with the local administration of the enterprise, institution, or region, and may not imply any real political disagreement. The effect, of course, is that the KGB has penetrated to the heart of the society.

We can distinguish four broad periods in the KGB’s activity since Stalin became leader. During the early transition period, until the Seventeenth Party Congress and Stalin’s murder of Kirov in 1934, the KGB was largely a Stalinist political police, with considerable, though limited powers. While it incarcerated and killed people, the numbers were small compared to the next phase (the death of millions as a result of forced collectivisation were not their direct responsibility). During the next period, to 1953, the secret police became the prime instrument of rule, administering vast labour camps essential to the economy. They were responsible for the death of millions through direct execution and the imposition of intolerable conditions in the labour camps. In this period the KGB penetrated to all levels of society, becoming a political police, economic controller, and pulveriser of the society itself.

Under Khrushchev it was radically reformed. The leading personnel were executed and its powers limited, particularly in relation to the elite. New cadres were drawn from the Komsomol. Its role became more subtle. The camps were largely, though not entirely, dissolved. Its role became one of maintaining order in an inherently unstable society. While imprisonment and killing were still used, its prime penalties were bureaucratic. It could arrange for an individual to be deported to one town to another, to lose his job or his housing, and even for academics to lose their titles and degrees. What the state had conferred, it can remove. Physicians who objected to the political use of mental hospitals were themselves declared insane. The power of the KGB was (and still remains) affirmative as well as negative. It could and did arrange for people to be promoted, obtain jobs, get scarce goods, and even get degrees and academic posts. While the power of the KGB was much less than under Stalin, it remained crucial to the stability of the society. It accomplished its tasks through a network of collaborators and part-timers. While many would not actually collaborate, few could withstrand its pressure.

The difference between the KGB and the political police in terrorist-type states like the former regimes in Argentina, Portugal and Nazi Germany is that the political police in those dictatorial market regimes were actually operating on the margin of society, a margin that might have been bigger or smaller in size. Contrast the words of one of the USSR’ s major writers, Bulat Okudzhava: “the secret police became a way of life amongst us”.

Capitalist parts, but no whole.
I would not wish to argue that the secret police provided the only form of control over labour, but it was of far greater import than the more directly economic and supposedly objective methods available to enterprise management. Take the example of piece rates. Formally, the direct system of control over the workers at the enterprise level was through the payments system. Most production workers could be described as being on some sort of piece-rate. Theorists of State Capitalism, including Martin, usually hold this fact up as proof of the capitalist nature of the USSR, and the existence of the wage-labour/capital relation.

Unfortunately for the theory, the piece rate system did not work as it is intended to do in capitalism. It failed to function as an objective, formal and rational means for getting workers to reach their targets, to perform at the pace and level of quality desired by their managers, or as decreed by the plan. This failure is actually a prime example of how — in the absence of the economy functioning as an integrated capitalist whole — the importation of dissagregated capitalist forms and techniques fails to lead to the desired results.

What actually happened to the piece-rate system is that the targets handed down from on high were difficult to understand and over-complex. Fulfillment didn’ t just depend on the willingness of the worker to succumb to external diktat, but could become impossible, simply because of problems in supply and maintenance. (This was a distinctive feature of the society which we shall analyse later). It is quite simply impossible to fulfill a target without the components required to make the product. This obviously rendered a system of internalised self-incentives inoperative. But it did more than that. In some instances, the interpenetration of the permanent system of bottlenecks with the piece-rate system could even become an incentive to leave a particular enterprise and look elsewhere for a more stable income and existence. Individual and collective bonuses were also often unsynchronised. Therefore, a group of individuals could reach their targets, but the shop or plant wouldn’t, and therefore no bonus would be paid. Statistics and accounts also vary widely on the actual proportion of the wage that was composed out of piece rates and performance bonuses. The general consensus amongst non-propagandists for the bureaucracy, however, is that these systems didn’t operate effectively and had only a marginal effect on wage levels and plan fulfilment.

This brings us to the question of wages and the labour market. Contrary to the implications of Martin Thomas’s argument, the ability of workers to change jobs in order to aquire better working conditions is not the defining characteristic of a capitalist labour market. In fact, such a definition is a mystification of neo-classical economics, an attempt to naturalise the social, which tries to present every capitalist form in a one-sided way as a self evidently good feature of any possible society. It is an understanding of the labour market normally only found in bourgeois textbooks. As we have seen, the real purpose of the labour market under capitalism is to act as an individualised form of social control over labour, by virtue of the fact that the labour market itself is regulated by the existence of a reserve army of labour. Capital coerces the workers through insecurity.

Now it is of course true that at times of full employment the capitalist labour market becomes a “seller’s market”, but this is in the long run exceptional. The basic, and necessary, tendency is for it to function as a “buyer’s market”. In fact, the existence of full employment for decades in the USSR negated the very purpose of a labour market from a capitalist point of view. It also provided a built in self-limitation to the bureaucrats’ own system of rule. The permanent labour shortage provided a limit to the use of terror as an economic regulator. Alongside the absence of the law of value, the inverted functioning of piece-rate and bonus systems, and the non-existence of a reserve army of labour, “full employment” created real objective barriers to the ability of the ruling class — despite savage levels of exploitation — to really get “inside” the production process.

The other set of problems associated with the claim that a labour market existed in the USSR is the question of the role of money. I will deal with money as capital later, but the essential point to make at this juncture, is that though wages were paid in roubles, how the worker secured her or his means of subsistence — outside of that which was provided as direct use values, as part of the labour collective, or for a nominal sum, like housing — had far more to do with queuing for long hours, personal connections, and various forms of black and grey markets, than it did with the cash nexus that exists in the west. It is vital to understand the implications of this.

Money in its developed form is an expression of abstract labour, i.e. socially average labour time. If then, as a matter of course, the distribution system requires the worker to queue for several hours longer than it took her or him to produce a product which is supposedly the value equivalent of the one you wish to purchase, then whatever kind of society you are living in, it is not one regulated by the monetary exchange that exists in capitalism. Prices and money have thus become administrative fictions, to a large extent cut loose from the ground of social labour.

The extent of black markets and queuing was actually a symptom of how far away the system was from any form of capitalism. The exchange of products on the basis of socially necessary labour time is at least 5,000 years old. What’s more, the specifically capitalist form of the law involves exchange based on prices of production and the formation of an average rate of profit. Stalinism didn’ t manage to get very near to either.

Disproportionalities, defective products and bureaucratic rule

It is now necessary to take a look at the way the system worked as an interactive whole. An understanding of the concrete characteristics of the social totality will then make the discussion of the accumulation of capital, and the operation of the labour theory of value, somewhat less abstract than in Stalinism and State Capitalism. Don Filtzer has provided a concise summary of the most startling features of the system’s in-built dysfunction. “The dislocations to which the Stalinist five year plans gave rise in the 1930s are now legion. Targets were set so high that the economy soon exhausted its ability to meet them. Factories lay idle because they could get no steel; steel mills could obtain no coal. Construction sites had no bricks. Electric power stations were built in areas were they had no consumers, since the construction of the factories that they were supposed to supply was way behind schedule; conversely, newly built factories had no electric power because the power stations that were to feed them had not yet been finished. Quality, the perpetual bugbear of soviet production, was a major bottleneck: new factories would turn out 50 per cent, 70 per cent, even 100 per cent defective production, which had either to be scrapped or was allowed to enter as means of production of further products which then turned out to be defective as well”.

This disproportionality and waste was not just a function of the overambitiousness of the zealous planners, leading to targets not being met and in turn to shortages and breakdowns in production. “The feverish pace at which the plan was carried out, the constant drive for ‘tempos’, to force each factory and each worker to produce as much as they could as quickly as possible, meant that co-ordination, in quantity, quality, and time, between all the interlinked parts of the economic organism became impossible... The contradictions to which Stalinist industrialisation gave rise have become permanent and reproducible parts of the system, and as such have become its immanent defining charcteristics.”

We can add to Filtzer’s summary of the system’s contradictions: an inbuilt tendency to overproduce means of production in relation to means of consumption, the introduction of new technology leading to an increase, rather than a reduction in the number of workers in that branch of industry, an inability to increase the relative as opposed to absolute surplus product, the largest repair and maintenance sector in human history, the alternation of periods of storming and inactivity. Behind these problems lay the central question of quality. As Rakovsky put it in his analysis of the crisis of Stalinist industrialisation: “A rail is a rail; and if, let us say, its formal production cost goes down by several percent, this does not mean that the economy has benefitted by this amount. The fact that this rail looks outwardly just like a pre-war rail deceives no one: nor does it eliminate the fact that our contemporary rail lasts not even five years, while a pre-war rail lasted forty. And this is happening not only with rails. Whole factories are being erected out of defective construction materials and equipped with machines made from defective metal. Today’ s decline in production costs will turn into tomorrows...colossal losses for the national economy”. Trotsky defined this failure to deal with the problem of quality as due to the absence of a democracy of the producers and consumers: “It is possible to build gigantic factories according to a ready-made Western pattern by bureaucratic command — although, to be sure, at triple the normal cost. But the farther you go, the more the economy runs into the problem of quality, which slips out of the hands of the bureaucracy like a shadow. The Soviet products are as though branded with the grey label of indifference. Under a nationalised economy, quality demands a democracy of producers and consumers, freedom of criticism and initiative — conditions incompatible with a totalitarian regime of fear, lies and flattery”. The systematic production of defective products was the inevitable result of the incompatability of bureaucratic planning and economic efficiency. It undermined any possibilty of rational overall social allocation of labour — even in the inverted, accidental, and fetishised form of the law of value.

The absence of capitalist collectivism
Taken as a whole, the system was more atomised than capitalism. This may sound paradoxical, but the point is that at least capitalism has the law of value to “collectivise” itself, in the sense of objectively creating real bonds uniting social labour, even if that bond is the inverted, alienated one of the cash nexus and competition. Within the bureaucratic relations of production, different sections of the ruling class had directly contradictory interests. Each enterprise director did not, and could not, function as a capitalist who expands the total social capital by expanding his own. Instead, they acted as autarkic bureaucratic managers whose main concern was to hoard supplies of raw materials and unskilled labour and to poach skilled workers, so as to ensure a relatively comfortable fullfillment of the plan targets, while keeping things tight enough to maintain pressure on the workers.

The rational response of an individual manager to the economic system was thus irrational for the system as a whole, for it meant using resources which theoretically, for the collective, would be better used elsewhere. Thus, the immanent laws of the system disorganised the economy as a totality. Whatever, we can call this process, capital accumulation it wasn’t.
This problem can be looked at from another angle, that of the total social surplus. Though this surplus was counted in roubles as part of the accounting of the overall plan, it was simply impossible (and illegal) for any individual to make this money

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