Chapter nineteen

ECONOMIC DEVELOPMENT OF SOCIALIST SOCIETY.
TRADE PHASE (SOCIALISM).


1. Socio-productive relations.


In socialist society being the first phase of socialist socio-economic structure, the socio-productive relations are mainly based on communal ownership of the main means of production, free labour and mainly collective economy and production. In this respect, it is similar to the primitive-communal society but different from slave-holding - serf and bourgeois-capitalist societies.

However, the first phase of socialist society differs not only from class society based on private ownership of the main means of production and one or another form of exploitation of man by man. It is also different from both primitive-communal society and future higher phase of modern classless society. This distinction lies not only in the level of development of productive forces, labour productivity, nature of labour, etc. (in general, productivity and nature of labour of the majority of labourers are the main indicators of the level of development of productive forces), but also in the very essence of socio-productive relations. As we have seen, every socio-economic structure passes, in the course of its development, through a number of phases differing from one another not only by productive forces of society, but also by socio-productive relations. The modern socialist socio-economic structure is not an exception to this rule.

The socialist society and its socio-productive relations differ from various phases of primitive-communal society in such a way: the difference from the higher phase of primitive-communal society is in the fact that, if, in the latter, the social production was carried out mainly individually, in the form of small private households of free community members, since agriculture based on primitive draught and hand technics was the leading branch of this society, then, in socialist society, the social production is carried out predominantly collectively, in the form of cooperative and state enterprises, since the leading branch of advanced socialist society is industry based, like agriculture, on machine technics and operational division of labour. Another distinction of higher phase of primitive-communal society from the lower phase of modern socialist society is wide spread occurrence of exploitation of man by man in the form of usury in the former.

But if we compare the lower, production phase of primitive-communal society with the socialist society, it turns out that the above distinctions between socialist society and the higher phase of primitive-communal society are absent in this case. Both in the lower phase of primitive-communal society and in socialist society, production is carried out collectively, although, together with collective labour, there exists private household playing an auxiliary role in both these societies. But does it mean that there are no essential differences between socio-productive relations of lower, production phase of primitive-communal society and socialist society? (We want to remind a reader, that the matter here concerns only socio-productive relations but not productive forces, the difference between which is enormous; the matter also does not concern political, ideological, family and national distinctions).

It would be absolutely wrong statement. There is a great difference between socio-productive relations of the first phase of primitive-communal society and the first phase of modern socialist society. It is in the fact that the material benefits in socialist society are or should be distributed according to contribution of every man to the creation of aggregate social product, according to the amount and quality of labour or labour product made by single members of socialist society. And at the first phase of primitive-communal society, the material benefits were distributed in accordance with limited needs of people.

The second distinction, interrelated with the first one, is in the fact that the material benefits in socialist society are distributed by means of trade exchange, while, at the first phase of primitive-communal society, the material benefits were distributed between society members by means of direct exchange of labour products without turning the latter to commodities. Although, there existed the natural-commodity exchange at the first phase of primitive-communal society, but, first, it didnt play any important role, second, it included only the surplus labour products while the advanced commodity production did not exist, and, third, the community members obtained, by means of natural-commodity exchange, not the material benefits that were produced by themselves or by their community, but the products made by other communities. The major part of material values were appropriated and consumed by community members directly in the form of natural labour products without turning them to commodities being exchanged on commodity market.

Quite opposite picture can be seen for socialist society: instead of natural economy, the commodity production exists; instead of direct exchange of labour products without commodization of them, the trade, money-commodity exchange exists that embraces or should embrace all or almost all material values and services being produced in socialist society. The trade, being one of the important spheres of human activity in socialist society, is a feature distinguishing, in addition to others, the socialist society as the first phase of socialist socio-economic structure. That is why we call the first phase of modern socialist society the trade phase, in contrast to the first phase of primitive-communal society that is called production phase.

And if we compare the modern socialist society with the future, second phase of socialist society, then it will turn out that the distinctions between the socio-productive relations are the same as those between socialism and production phase of primitive-communal society. At the higher phase of socialist society, like at the lower phase of primitive-communal society, the direct exchange of labour products, without turning them to commodities, will take place. The private and cooperative ownership of the main means of production, commodity production, commerce, money, credit will disappear. Besides, the material benefits will be distributed according to limited needs of people, not according to the amount of labour. Thus, we can see that there are no substantial, fundamental differences between socio-productive relations of the first, productive phase of ancient communist society and those of the second phase of modern socialist society. So, the higher phase of modern socialist society, the same way as the lower phase of primitive-communal society, can be called productive phase.

If the class socio-economic structures, both slave-holding - serf and capitalist, consist of the same three phases: trade, productive and usurious, then the classless socio-economic structures, both primitive-communal and modern socialist, as against the former, consist of only two phases that are not the same. If the primitive-communal society consists of productive (lower) and usurious (higher) phases, then the modern socialist society consists of trade (lower) and productive (higher) phases.

If we now compare, as a whole, the primitive-communal society passing through the two phases: productive and usurious, in the course of its development, and the modern socialist society that also passes along two phases: trade and productive, during its development, we can see that they as if belong to different parts of one and the same socio-economic structure, not to different ones. This unified socio-economic structure has been as though torn during its socio-historical development by the class society that appeared two and a half thousand years ago and continues to exist at present. This class society represents a sort of break two and a half millenniums long in the development of one and the same socio-economic structure.

If we recognize the primitive-communal society and the modern socialist society as the unified socio-economic structure, then it will turn out that it passes through the same phases of development, as the class socio-economic structures: slave-holding - serf and bourgeois-capitalist, do. These qualitatively different phases are: trade, productive and usurious ones. However, the socialist socio-economic structure passes along these phases in a different order: productive, usurious, trade and again productive.

Thus, the society, in the course of its social development, comes to the same phase as the one from which it once began its development: to the productive phase of classless socio-economic structure, but it returns to this form on a new material basis, with new productive forces. The majority of researchers-marxists think that the society, during its historical development, passes through five socio-economic structures: primitive-communal, slave-holding, feudal, capitalist and communist. Some researchers-marxists distinguish not five, but six structures. They place one more structure between the primitive-communal and slave-holding societies. Some of them call it Asiatic mode of production, the other the archaic socio-economic structure.

However, we have seen above that there is neither archaic, nor feudal socio-economic structure. As a result, the number of socio-economic structures has reduced from five-six to four. And now we see that there are only three of them: the classless, that appeared, very approximately, some 15 to 20 thousand years ago and now, in XX century, revived again; the slave-holding serf, appeared in the first millennium BC and existed in Western Europe till XIV-XV centuries, and in Eastern Europe till XIX century; and the capitalist socio-economic structure that appeared in XIV-XV centuries and existed to present day. The confusion in determining the number of socio-economic structures takes place most of all due to entanglement of structures and their phases. If we compare the duration of productive phase of classless society and the duration of all the other phases taken together, then the difference would be impressive, even if we take only the part of productive phase that had already taken place in the development of ancient society into consideration; but if we take the duration of future part of productive phase then the difference would be enormous. All those phases are as if pre-history of society, and the real history will only begin with transition, or, rather, return of society to the productive phase of classless society.

The modern socialist society cannot transfer to productive phase directly, without trade phase, just as the primitive-communal society could not turn to class society without passing through the usurious phase that prepared the conditions, paved the way for the class society, and just as the class socio-economic structures could not begin their development with productive phase by-passing trade one. One can say, in a certain way, that the usurious phase of primitive-communal society was the period of transition from classless to class society, and the trade phase of modern socialist society is the transition period from class society to classless one.

The trade phase of modern socialist society is a temporary, transient phase of development of society; it creates the material prerequisites for the next, main phase of socialist society. However, this thesis is not to be taken absolutely, since the socialism being the lower phase of modern classless society is a relatively long phase of development of society, it develops according to its own laws and, like trade phases of slave-holding - serf and capitalist societies, represents an independent phase of development. As we have already said, the socialism differs from the higher phase communism (if we mean the socio-productive relations only), first, by the fact that, together with national ownership, there are also cooperative and private forms of ownership under socialism, at that, the cooperative one can become the main form of ownership: second, by the fact that, under socialism, the material and spiritual benefits and services are distributed in accordance with the results of labour of every labourer, i.e. in the manner that (under modern conditions and modern level of development of productive forces, that do not enable to satisfy all the needs of people owing to relatively low level of labour productivity) promotes more rapid development, the growth of social labour productivity and the increase of living standard of labourers. And, third, the socialism differs from the higher phase by the fact that it is based on commodity production, money economy and trade. And, consequently, in the socialist society, unlike the higher phase, the perfection of economic policy of price setting, remuneration of labour and taxation plays an important role.

2. Social structure of socialist society.


Many researchers of social structure of Soviet society call the Soviet society the socialist society, the working population of which is divided to the working class, the class of kolkhoz peasants and intellectuals. Some of these researchers mark out the employees as a special social layer. This presentation of the structure of Soviet society is absolutely unacceptable for us. First, the question arises: to what class or social layer shall we relate the workers of fishing co-operatives (kolkhozes)? We cannot relate them to the class of kolkhoz peasants, since they have nothing to do with agriculture and peasantry. It is also wrong to mark them out as an independent layer (class).

Second, to what social layer or class can we relate the management personnel, that was referred to middle classes in the slave-holding - serf and capitalist societies? We cannot relate them to intellectuals, even to technical ones. Indeed, it would be absurd, to relate a kolkhoz brigade-leader, a shift foreman at a plant or a chief accountant to intellectuals.

The management personnel cannot also be related to the social layer of employees. Undoubtedly, an ordinary book-keeper, rate-setter, planner, like many other ordinary labourers of departments and offices can be related to the social layer of employees, but the labour of chiefs of these departments and offices is distinctly different by its nature. They are at the head of collectives of people subordinate to them; their labour is administrative, managerial labour. And the subordinate employees, workers and intellectuals perform the work entrusted to them by chiefs; their work is of performing nature. The administrative staff is different from all the other social layers by the fact that it has a function of management of labour collectives. Thus, it is natural to separate them as an independent social layer.

Lenin gave the following definition of classes, that is useful for investigation of social structure of socialist (including Soviet) society: Classes are the big groups of people that are different by their place in the historically determined structure of social production, by their relation (for the most part, legislatively fixed and formalized) to the means of production, by their role in social organization of labour, and, therefore, by the methods of acquisition and the share of social wealth they have.

In accordance with this definition, the Soviet labourers can be divided to, first, the labourers of state institutions and enterprises and the labourers of co-operative enterprises: agricultural and fishing co-operatives (kolkhozes). This is the division of labourers by their relation to the means of production.

The Soviet labourers can also be divided by another feature, namely by their place in the system of social production: to workers occupied by physical labour, employees occupied mainly by non-creative mental labour, and intellectuals occupier predominantly by creative mental labour.

By the same, as well as by the third feature the role in social organization of labour, all the Soviet labourers can be divided to managers (organizers) and the directed (executives). The management personnel can be related to the former, while the workers, employees and intellectuals to the latter.

Using Lenins features of determination of social layers (classes), we can divide the Soviet labourers to the following social layers:
  1. Management personnel of state enterprises and institutions.
  2. Management personnel of co-operative enterprises (management personnel of public organizations should, obviously, be related to this category).
  3. Employees of state enterprises and institutions.
  4. Employees of co-operative enterprises.
  5. Intellectuals of state enterprises and institutions.
  6. Intellectuals of co-operative enterprises.
  7. Workers of co-operative enterprises.
  8. Workers of state enterprises and institutions.


Thus, the Soviet labourers, like those of other socialist countries, can be subdivided not into three or four, but into eight social layers. In Poland and Yugoslavia, one more social layer is added to the above eight ones: small commodity producers. But is it expedient, for example, to divide the employees into two social layers: the employees of state enterprises and institutions and the employees of co-operative enterprises? Wouldnt it be better to relate them all to the one social layer of employees?

If we refer all the employees to the one social layer of employees, neglecting the relation of labourers to the means of production, then we should, at the same time, have to join all the workers of state and co-operative enterprises into another united social layer, all the management personnel into the third united social layer, and all the intellectuals into one more social layer.

But, in such a case, only four social layers: management personnel, employees, intellectuals and workers would remain. And the social structure of Soviet labourers would not reflect the subdivision of enterprises into state and co-operative ones, but this is contrary to Lenins definition of social layers (classes).

But, may be it would be appropriate if only the labourers of state enterprises and establishments are subdivided into management personnel, employees, intellectuals and workers, while all the labourers of co-operative enterprises, both agricultural and fishing, should be related to the united social layer (class) of co-operators, the same way as modern researchers refer them to the united class of kolkhoz peasantry?

But if we refer all the labourers of co-operative enterprises to the one social layer, disregarding the fact that they are subdivided into the labourers of physical and mental labour; into the labourers of managerial and executive labour; into the labourers of creative and non-creative labour; then we should, obviously, do the same with respect to the labourers of state enterprises, but this again contradicts the Lenins definition of classes. Moreover, it would be quite strange to divide the labourers of state farms (sovkhozes) into different social layers, while relating the labourers of collective farms (kolkhozes) that are of the same size as the former and make the same production, to one social layer. And the subdivision of all the Soviet labourers into two social layers, namely the class of state labourers and the class of co-operative labourers would be very simplified and primitive.

Thus, taking the above Lenins features into account, we have the division of Soviet labourers into eight social layers. But our consideration of social structure of socialist, including Soviet, society would be incomplete and biased, if we restrict ourselves to these features only. The point is that all these social layers are not equal with respect to their social rights. The management personnel of state enterprises and establishments (the bureaucracy), being at the very top of Soviet social hierarchy, are apart from other social layers. And the workers of state enterprises and establishments are at the very bottom of the social hierarchy of Soviet society.

The management personnel of co-operative enterprises take the middle position between the management personnel of state enterprises and establishments and the other social layers of Soviet society. Since they are also managerial labourers, they are close to the bureaucracy, but, in contrast to the latter that are appointed by higher managers and are subordinate to them, the managers of co-operative enterprises are not appointed from above, but elected by their labour collectives. There is an interdependency here. Every ordinary worker of co-operative is subordinate to management personnel, but, at the same time, every manager of co-operative, being elected by the labour collective, is dependent upon this collective to some extent. Therefore, the social rights of managers are somewhat confined, while the social rights of workers, employees and intellectuals are somewhat expanded, so that there exists more or less social equality of all social layers of co-operative enterprises.

Quite another picture can be seen at state enterprises and establishments. The managers here are not elected but appointed from above and are, consequently, independent on their collectives. There is not two-way but unilateral dependence and subordination here. The workers, employees and intellectuals of state enterprises and establishments are subordinate and, consequently, dependent upon management personnel, the latter being at the higher stage of social hierarchy of Soviet society. Owing to this fact, the bureaucracy is the highest layer of socialist, including Soviet, society.

As for the other social layers of Soviet society, all of them, with the exception of workers of state enterprises and establishments, can be related to middle layers. The intellectuals and employees can be referred to middle social layers, because they, like managers, are occupied with mental labour that makes them related to the latter and differs them from the workers being occupied with physical labour. The workers of co-operative enterprises can be related to middle social layer, because they take part in election of the managerial staff and, in that way, can influence their activity. Besides, they take part in deciding all the main issues of economic policy of their co-operatives. But the workers of state enterprises and establishments are deprived of such a possibility. For this reason, they can be related to the lower social layer of socialist society.

Thus, one of the eight social layers of Soviet society is the highest one. This is the bureaucracy. One of them is the lowest. These are the workers of state enterprises and establishments. The remaining six layers are the middle social layers, occupying the middle, intermediate position between the extreme, opposed layers.

However, one should bear in mind that some middle social layers are closer to the highest layer in the Soviet social hierarchy, the other closer to the lowest layer, still the other between them. The managers of co-operative enterprises and the employees of state enterprises and establishments are closer to the bureaucracy. The workers of co-operative enterprises and the intellectuals of state enterprises and establishments are closer to the workers of state enterprises and establishments. Two important questions arise at once. The first one: should we eliminate or strive for elimination of the highest and the lowest social layers transforming them to middle social layers by means of introduction of production (working) self-administration, just as it had been done in Yugoslavia at the beginning of 1950s? The second question: should we subdivide the social layers of Soviet society into the highest, the lowest and medium ones; isnt it anti-sovietism, anti-communism, etc.? Lets try to answer these questions.

The scientific socialism, being a component part of Marxism-Leninism, is different from the Utopian socialism by the fact that the latter deduces the necessity of building socialism from the idea of justice, while the scientific socialism of Marx, Engels and Lenin deduces the necessity of building socialism and the need for all its transformations from the idea of economic expediency. From this point of view, any social transformations of society are necessary, if they are economically expedient. And the idea of justice, however important it is, plays a secondary role. The question arises: has the working self-administration in Yugoslavia proved to be economically expedient for other socialist countries, including the Soviet Union? The experience and present-day economic situation in Yugoslavia give some doubts in this respect. First, Yugoslavia is one of the main debtors in the world. Its external debt exceeds 20 billion dollars. Second, there are about 1.2 million unemployed in the country; some of them went out abroad in search of job. And, third, there is permanent inflation in Yugoslavia; its pace is one of the biggest in the world. So, the natural question arises: isnt it too high a price for social equality brought by working self-administration?

Nevertheless, it should be noted that, in case of introduction of working self-administration in the USSR, the subdivision of Soviet social layers into the highest, lowest and medium would be unnecessary. And if the state enterprises are transformed to co-operative ones, then the number of social layers in the USSR would reduce to four social layers equal in their rights: management personnel, employees, intellectuals and workers.

As to the second question, we should say the following: every scientific investigation must be unbiased and conscientious. Science must not submit to ideology; on the contrary, ideology must be subordinate to science. Otherwise, true science would turn to a vulgar, servile science, or, rather, to a false science. Marx, Engels and Lenin had written a lot about vulgar bourgeois political economy; we have no need to be repeated. We should only stress that their words about vulgarisation of science concern the economics of socialism as well.

We have no right to pretend not to see some negative phenomena in Soviet economy, like we them or not. After all, the concealment is a form of falsification and vulgarisation of science. And as for possible falseness of one or another concept or idea, it should be noted that one of the main rights and gains of people is the right to mistake. This right is especially important in the field of scientific investigation. And if someone does not agree with conclusions of another, he has the right to refute them, but not to forbid them; after all, the truth occurs as a result of dispute.

During consideration of social structure of Soviet society, it should be useful to undertake a historical excursus into the Soviet society, to have a closer look to bureaucracy, to state-bureaucratic and co-operative models of socialism.

3. Bureaucracy and labourers in Soviet society.


The October revolution eliminated all the higher and medium classes in Russia: capitalist bourgeoisie, landowners, kulaks (rich peasants), traders, and, finally, bureaucracy. These classes disappeared from the Soviet society. All but one the bureaucracy: in place of old, tsarist bureaucracy, the new party, Soviet, trade union, economic, ministerial bureaucracy began to arise. Before the new bureaucracy had risen and began to dominate over the society, over the labourers, it had gone through a long path of build-up and development. Originally, the bureaucracy, being formed in the Soviet society, was recruited from the vanguard of proletariat and poor peasantry (and, in part, intellectuals), i.e. from the most active and anti-capitalist part of labourers. It was connected to the labourers by their origins and did not stand out against a background of them. In the first decade of the existence of Soviet state, both marxist-leninist ideology, revolutionary socialist morals and psychology, and socio-economic policy of revolutionary Soviet leaders prevented the separation of bureaucracy from labourers, its formation as an independent class.

The policy of egalitarian distribution of material and other benefits that was pursued by Soviet leaders with V.I.Lenin at the head in the period since 1917 to 1921, hindered from formation of bureaucracy and its separation from labourers. The market socialism with mixed economy in the period of new economic policy (NEP), that was introduced after the X congress of RKP(B) in 1921 and lasted to the end of 1928, was also not conductive to the formation of bureaucracy as an independent class.

The process of rapid formation of bureaucracy as a class began with the post-NEP Stalins economic policy the policy of accelerated total collectivisation of peasantry, that was carried out by means of compulsory, serf, police methods; the policy of rapid industrialization of the USSR that was destructive for health and the very life of labourers; the policy of transformation of market economy to the super-centralized directive-plan economy; the policy of transformation of federative union to the unitary state turning all the nations of the USSR to lawless subjects of Soviet empire.

At that time, a great number of large and huge enterprises were built throughout the country: plants, factories, canals, railways, power stations, building offices, sovkhozes, kolkhozes, machine and tractor stations, etc. For the state to be able to perform the centralized control over these enterprises, the huge state structure for control and compulsion was needed. And it had been created. As a result, the relatively not numerous bureaucracy turned to multi-million ruling class. At the same time, the rapidly growing CPSU(B) began to turn from a party of workers to anti-worker and anti-national party of the new class of bureaucracy.

The bureaucracy, having turned to the ruling class under I.Stalin, became the only politically and economically privileged class in the USSR. All the constitutional rights, that are as if available for all Soviet citizens, as well as citizens of other socialist countries, belong, virtually, to the class of bureaucracy only. And the Soviet labourers being nominally equal to the bureaucracy are, in fact, deprived of all these rights, being the lawless subjects of bureaucracy.

The Soviet labourers, having been turned by I.Stalin into the class of state farm-hands, into the state proletariat, have, actually, the only right right to work, being, however, both the right and the duty, since the right to work has been transformed to the duty to work, and the labour, that was free during the first decade of Soviet power, turned, virtually, to forced labour. The serf peasants in pre-reform Russia (before 1861) also had their right to work; after all, they were provided with job. But could they be proud of this? And can the Soviet labourers be proud of their right to work, if this labour (in addition, extremely poorly-paid) is not so much right as duty, or right-duty?

Generally speaking, all the rights of labourers in the USSR are either confined strictly, abolished, or take a perverted form of obligation. For example, the eligibility, i.e. the right of citizens to nominate somebody for election to one or another public post or to Soviets of peoples deputies, is eliminated, while the universal suffrage turns to honorary duty, at that the appointment by election is replaced by voting for the candidates selected and approved by bureaucracy beforehand. For labourers, this is election without choice!

The matters with other rights are the same. How can we speak of real right for home, if 10% of Soviet labourers, i.e. 25 to 30 million people, do not have home at all, huddling in miserable conditions and waiting for a flat in turn during 10, 15 or even 20 years; more than half of Soviet labourers live either in small flats, or in uncomfortable dwellings. In the Soviet society, only the bureaucracy has the real right for home.

How can we speak of real right for free health protection, if there are permanent queues at the consulting rooms of doctors that treat labourers, if the skill level of medical specialists is low, if the constant lack of efficient medicines takes place and if the medical facilities in the USSR are the most backward among the industrial countries? The relative number of medical specialists (per given amount of population) in the USSR is several times more than that in other countries; simultaneously, the lowest lifetime and the highest level of infant mortality among the industrial countries are also the achievements of the USSR.

How can we speak of real right to education, if only 20 to 30% of those wishing to learn are being admitted to the colleges of the country every year, while the others are deprived of this right? For the latter (and they are mainly labourers and their children), the right to education is the same right, as the right to work for the unemployed in the capitalist world. Besides, people entering the colleges have to render a favourable testimonial from bureaucracy, being, in that way, in full dependence on the latter.

In the Soviet society, all these and other rights are only possessed by bureaucracy. The labourers are virtually deprived of them.

Under Stalin, Soviet labourers workers, kolkhoz peasantry, intellectuals and employees took the position in the society that resembles that of state serfs (peasants and workers) in pre-reform Russia. At that time, the freedom of movement was eliminated. Passports that were eliminated by the October revolution are restored, for the bureaucracy and bureaucratic state to have control over labourers; moreover, the cruel and immoral by its nature practice of passport registration was introduced and exists to present day. In 1940, Soviet labourers were deprived of the right to change the place of employment without permission of bureaucracy; thus, people became attached to both dwelling place and place of employment. Isnt it a new edition of state serfdom?!

Besides, millions of Soviet labourers were unlawfully arrested and sent to prisons and concentration camps for up to 25 years with the purpose to provide the great Stalins construction sites with super-cheap semi-slave and slave labour force, the amount of which, in some years of Stalins super-industrialization, reached 10 to 15 million people, i.e. up to 10% of able-bodied population of the country. The enterprises erected during Stalins era were built on the bones of millions of labourers! At the same time, the bureaucracy with I.Stalin at the head accomplished the cultural revolution that, having started as peoples socialist cultural revolution, transformed to officially-bureaucratic cultural revolution. The marxist-leninist concept had been perverted, falsified, turned upside down, transformed from the scientific concept (hypothesis) to a system of dogmas, to atheistic religion, had been adapted for retention and strengthening the domination of bureaucracy. Any attempts to have doubts as to any thesis, any statement of the founders of marxism-leninism, including those of one and a half century age, were declared by bureaucracy and its ideologists and servants from KGB as revisionism and opportunism, anti-communism and anti-sovietism, or, in short, criminal activity. And all this - despite the fact that, according to Marx, immature society is accompanied by immature theories! In spite of the Marx motto: doubt about everything!

The popular socialist morality, humane by its nature, gave way to cruel, inhuman, hypocritical bureaucratic morality, existing even today; it is based on overall fear of punishment for criticism of bureaucracy and for anti-soviet, i.e. anti-bureaucratic political activity; on fear of prisons and camps and, under Stalin, of the death penalty; on fear of Siberian exile and deportation abroad; on fear of signing off or shifting to another job, less prestigious and poorly-paid; on fear of lowering wages and deprivation of premiums; on fear of arrest and forced placement to mental hospital; on fear of bureaucracy and bureaucratic state.

On the other hand, in 1925 I.Stalin repealed the prohibition law that remained in force during 11 years and brought positive results. The repeal of prohibition law, under conditions of lawlessness, repressions and overall fear, led to the widest spread of drunkenness and alcoholism, to moral degradation of Soviet society and Soviet labourers, to mass criminality, to undermining the health of labourers who, being unable to find satisfaction either in work or in social life, try to find it in alcohol and, recently, in drugs. Overall drunkenness of Soviet labourers is being encouraged by bureaucracy and its party CPSU, since the alcoholism places people outside political life; it has turned to unofficial policy of drunkardisation of labourers with the purpose of strengthening the domination of bureaucracy. Overall drunkenness is one of many crimes of bureaucracy and CPSU; and, sooner or later, they will have to answer for this before the divine justice.

After Stalins death, the status of Soviet labourers changed only a little. The attachment of labourers to their work places had been cancelled, but they are, as before, called to account and taken to camps for untimely begin of work; in camps they are forced to work. Now as before, the practise of passport registration remains in force. As before, all the country is, virtually, a gigantic labour camp being isolated from outer world by the iron curtain; and the labourers are not allowed to leave this camp. As before, the activity of any opposition to existing regime is prohibited or strictly confined.

At that, the economic status of bureaucracy has changed considerably. After Stalins death, the level of income of bureaucracy grew several times faster than that of labourers. As a result, the living standard of medium echelon of bureaucracy exceeds that of labourers five to ten times, while the living standard of leaders of bureaucracy exceeds that of labourers ten to fifteen times. The bureaucracy of other socialist countries is in the same privileged position. The gap of living standards of bureaucracy and labourers in socialist society is not less than the gap in incomes of bourgeoisie and labourers (proletariat) in capitalist society.

The same way as we call western bourgeois society the capitalist society on the basis of the fact that the class of capitalists is privileged and economically dominant in it, we can call the modern socialist society, including and first of all Soviet society, the bureaucratic society basing on the fact that the class of bureaucracy is privileged and economically dominant in this society. Accordingly, the social structure in socialist countries is not just socialist, but socialist-bureaucratic structure.

The new bureaucracy in the USSR is no different from the old tsarist bureaucracy of Russian empire, and the domination of bureaucracy in bureaucratic society is no different from the rule of bourgeoisie in capitalist society, the more so since the bourgeoisie in modern bourgeois-capitalist society dominates under conditions of multi-party democracy, while the bureaucracy of modern socialist-bureaucratic society rules under conditions of single-party dictatorship.

The privileged status of bureaucracy in Soviet society lies not only in its higher wages, but also in the fact that it obtains commodities and services of higher quality at the same (and, often, at lower) prices as labourers do, since the latter buy scarce commodities in kolkhoz market, in co-operative shops and in the black market at higher prices, while the bureaucracy, especially its medium and higher echelons, does it in special distribution centres, that are closed for simple labourers, at lower prices. Besides, the bureaucracy has the right to buy imported commodities of higher quality at artificially understated prices, while the labourers are deprived of such a possibility.

The privileged status of bureaucracy is also conditioned by the fact that the bureaucracy consumes a lot (by far more than labourers) of goods from so-called social consumption funds; the latter had been created and are constantly replenished mainly for the purpose of secret, concealed increase of living standard of bureaucracy. The higher living standard of bureaucracy is also provided by corruption in which it is bogged down.

The bureaucracy in the Soviet society has turned to the class of replete, educated and self-complacent functionaries, and its core element the partocracy to the caste of untouchables; no one is allowed to criticize them during their lives. At the same time, labourers in the Soviet bureaucratic society are turned to the class of lawless, intimidated and cheated, to the class of humble and insulted subjects of bureaucratic state and the ruling class of bureaucracy. The well-known words: Those who were nothing, will be everything completely relate to the new bureaucracy of new bureaucratic society. And the Soviet labourers remain to be the same as they were before the revolution, i.e. nothing.

The transformation of bureaucracy to the only owner in the socialist-bureaucratic society is the social-economic basis of domination of bureaucracy. Public posts are in private ownership of the functionaries. The state itself becoming the property of bureaucracy turns to the bureaucratic state. The nation-wide state ownership of the main means of production transforms to class-wide common ownership of bureaucracy. Karl Marx wrote (K.Marx, The civil war in France, part 4, vol.17, p.342) that, in the Commune of Paris, public posts ceased to be in private ownership of protégés of the central government. It means that, after the October revolution as well, the public posts being previously in private ownership of tsarist bureaucracy ceased to be such. However, after the formation of new bureaucracy as a class, the public posts became its private property, passed into its disposal, lifelong and heritable possession.

Karl Marx wrote (vol.1, p.272), bearing the pre-revolutionary bureaucracy in mind, that the bureaucracy has the state in its possession it is its private property. Obviously, before the October revolution as well, especially in the period before the reform of 1861, the state was the property of tsarist bureaucracy. After the October revolution, the state ceased to be its property. However, in 1930s, when the new bureaucracy turned to the ruling class, the state became its property turning to the bureaucratic state.

And if we assert, from the Marxist point of view, that the state enterprises in capitalist society are in class-wide ownership of the ruling class of capitalist bourgeoisie, i.e. are state-capitalist enterprises, then we have to admit by analogy that state enterprises in bureaucratic society are in class-wide ownership of the dominant class of bureaucracy, i.e. are state-bureaucratic enterprises.

4. State-bureaucratic socialism and co-operative socialism.


Is it possible to abolish the ruling class of Soviet society bureaucracy, the same way as it had been done before with other classes: capitalists, landowners, kulaks and traders?

Apparently, for the time being, it is impossible to manage without bureaucracy in socialist society, so long as there exists the large non-automated production, mass criminality, until the world is divided into many states (sometimes, hostile to one another) with different social and political structures. But the number of bureaucrats in socialist society should be shortened several times and, the main point, the political and economic domination of bureaucracy should be eliminated.

The bureaucracy can be equalized in rights with other social layers of socialist society: workers, kolkhoz peasantry, intellectuals and employees. For that, it is necessary, first, to accomplish the democratisation of society and, second, to transform the major part of bureaucratic enterprises and institutions to co-operative enterprises and institutions belonging to working collectives.

These co-operative-socialist enterprises and institutions should (in contrast to modern kolkhozes being co-operative enterprises only nominally) be completely independent on the state and its administrative bureaucratic machinery. The working collectives of co-operative enterprises and institutions: plants, factories and construction sites, agricultural, transport and commercial enterprises, public service and public catering establishments, scientific institutes and design offices, publishing houses and typographies, editorial staffs of papers and magazines, cinemas and concert halls, etc., etc. should determine their labour and commercial activity: management and planning, price formation and remuneration of labour, sale and supply entirely themselves. The bureaucracy and bureaucratic state should be deprived of the right to interfere in the activity of co-operative enterprises and establishments, as it is the case nowadays.

Such a socialism, in which the co-operative sector is the main sector of economy, is the co-operative socialism, as against the modern socialism being the state-bureaucratic socialism. The state-bureaucratic socialism is an immature, undeveloped (underdeveloped, deformed) incomplete socialism, the socialism with Asiatic mode of production, that corresponds (if it has the right to exist at all) to the period of transition from capitalism to mature socialism, i.e. to the society without forced and hired labour. And the co-operative socialism is the mature, advanced, complete socialism corresponding to the first, lower phase of advanced socialist society.

In the immature state-bureaucratic socialist society, the collective, mainly state ownership of the main means of production is artificially combined with private-bureaucratic sole managerial form of production control; the latter does not correspond to the former. On the contrary, in mature co-operative socialist society, the collective, mainly co-operative ownership of the main means of production will be naturally and harmoniously combined with collective form of production control production self-administration, when all the important decisions are taken collectively by all the labourers of co-operatives or by their elective representatives: working councils, executive committees, councils of working collectives.

The difference between the lower phase of advanced socialist society co-operative socialism and its higher phase is in the fact that the lower phase of this society is accompanied mainly by the lower form of communal ownership co-operative one, as well as the lower form of social distribution of life benefits according to the results of labour. The higher phase of socialist society is accompanied with the higher form of communal ownership nation-wide, as well as the higher form social distribution of life benefits according to needs.

The combination of higher, nation-wide form of communal ownership with lower form of distribution according to the results of labour, is the same artificial and, consequently, ineffective and economically inexpedient, as the combination of lower, co-operative form of communal ownership with higher form of social distribution according to needs. The unnatural combination of higher (nation-wide) form of communal ownership of the main means of production with lower form of communal distribution of life benefits (according to results of labour) leads to the fact that the nation-wide ownership of the means of production transforms inevitably to all-bureaucracy state ownership, to the class ownership of bureaucracy. The common ownership of the whole nation turns to the common ownership of the whole bureaucracy. This is a blind branch, stagnant direction of development of socialist society that can appear either in extreme conditions, or under the influence of subjective factor of development of society: ideology (marxism-leninism-stalinism), personality (I.Stalin), some other mighty state (for Eastern Europe the USSR), its leaders.

The learned lackeys of bureaucracy assert that the modern socialist society is a just society, since the commodities and services in it are being sold at planned fair prices, that are (as if) scientifically grounded by functionaries in their bureaucratic offices, at the prices that are very close to values of commodities in accordance to the Marx doctrine. However, first, according to Marx, the commodities, not satisfying any needs of people, i.e. not being use values, have no value at all or, that is the same, have zero value. Consequently, the low-grade commodities and services, that satisfy peoples needs only partially, have lower exchange value, than the commodities and services of high quality, and should be sold at lower prices than the latter (though the same amount of labour has been spent for production of them both). But no one office functionary can exactly determine the level of quality and, therefore, the value of commodities and services. The values and prices of commodities and services can be determined most exactly in the market, depending on demand and quality of them.

And, second, the economic practise of socialist countries demonstrates that, in socialist society, it is economically expedient to sale the commodities and services not at their values but at the prices of their production, since the sale of commodities at their values, i.e. in accordance with the amount of labour embodied in them, multiply increases the pay-back period of funds invested into construction, technical reconstruction, modernization of fund intensive enterprises with high level of mechanization, automation and computerization, decreases the yield of capital investments, causes the relative withdrawal of capital from circulation, decreases the efficiency of capital investments, slows down their turnover.

The sale of commodities and services at the prices of production is much more effective and expedient under conditions of market economy, market-co-operative socialism, since, under state-bureaucratic socialism, the whole profit (surplus product), or its major part, enters the state budget, i.e. at the disposal of bureaucracy that redistributes it at its own discretion consuming the major part of it; as a result, it does not matter for the labourers, how much profit is being created at their enterprises. On the contrary, under conditions of market co-operative socialism, the major part of profit created will remain at the disposal of collectives of co-operative enterprises and institutions; they will create and use profit at their own discretion and will, therefore, be interested to have the maximum amount of profit.

The ideologists of bureaucracy assert that the prices determined from above are fair prices, while the prices fixed by producers themselves under the influence of demand and supply and material benefit are unjust and unstable. However, the practise testifies that the centralized price formation in bureaucratic society leads to the fact that it is not advantageous for bureaucratic enterprises to produce many kinds of commodities and services, as a result, the state budget pays subventions (sometimes, huge) for production of such commodities; other kinds of commodities and services are, vice versa, very profitable, but the major part of this profit is being withdrawn in the form of turnover tax, assignment of remaining profit, etc. to state budget and redistributed among unprofitable enterprises. And, the main point, the collectives of bureaucratic enterprises and institutions are not interested in increasing the labour productivity and lowering the cost of production of commodities and services, because the artificial purchasing prises change (reduce) at once and all the benefit of increasing the labour productivity and lowering the cost of production passes to the bureaucratic state and bureaucracy.

The ideologists and propagandists of bureaucracy affirm that the centralized planning guarantees the proportional development of social production, but the practise shows that, owing to the centralized planning, the managers of enterprises and institutions strive for understated plans of production to be confident in their fulfilment, they do not aim to over-fulfil plans being afraid of increasing plans in the future; as a result, great (sometimes enormous) unused production reserves are being formed at the enterprises.

The ideologists of bureaucracy assert that planning wages from above enables to establish just remuneration of labour, but, in real life, no one longs for earning above the planned level, since everyone knows that, under conditions of centralized bureaucratic planning wages, the amount of remuneration does not depend upon the level of labour productivity, output norms, job rates, purchasing prices; on the contrary output norms, job rates and purchasing prices depend upon the labour productivity: if the labour productivity becomes too high and the level of remuneration begins to exceed the planned level, the output norms would be increased, while the job rates and purchasing prices would drop, so that the wages of labourers remains at the level planned for years ahead. Everyone knows this, so no one strives for earning above the planned level, although the enterprises and institutions have great opportunities in this field. As a result, the labour productivity increases very slowly. The bureaucracy pretends to pay good money to labourers; the labourers pretend to work good for the bureaucracy!

In the same way, the centralized control leads to suppression of any initiative of labourers: the initiative of labourers is being suppressed by small bureaucracy, the initiative of small bureaucracy is being suppressed by medium bureaucracy, and the initiative of the latter is being suppressed by higher bureaucracy. As a result, there is no any initiative in the whole bureaucratic society and in the whole structure of bureaucratic control; even small production problems are being resolved from above, since no one wants to be responsible for their resolution. These factors lead to slow and, sometimes, improper resolution of problems causing great losses to national economy.

The centralized sale and supply lead to the fact that, in some areas, places, at some enterprises and establishments, the surplus of some products and the lack of other ones take place, while, in other places, there is the lack of the former and the surplus of the latter, because the functionaries at the higher level cannot determine exactly the level of need in various products and raw materials at the local level in the nearest future, for today, since the needs of the economy change quickly depending on situation.

Under conditions of market economy and co-operative socialism, all these questions of economic activity of co-operative enterprises and institutions will be resolved at the local level being guided by the benefit of collectives, collective material interest, and, therefore, they will be resolved quickly and efficiently, that will be of use not only for single collectives, but also for co-operative-socialist society as a whole.

The centralized production and planned economy are in the same correlation with decentralized production and market economy, as artificial and natural selection in biological development are. Animals and plants do not need artificial selection. People need it. The society, labourers do not need centralized production, planned economy. The bureaucracy needs them. The centralized production and planned economy are artificial phenomena in the development of society. On the contrary, decentralized production and market economy are natural-historical phenomena, existing during the whole period of development of society (only in some ancient Oriental countries with Asiatic mode of production, there existed a sort of centralized production, caused by the necessity of construction and repair of large irrigation facilities on a national scale). While the non-automated production exists, it should be decentralized and the economy should be of market type.

Not all the enterprises and institutions in co-operative-socialist society must be of co-operative type. Together with co-operative and small state sectors of national economy, a significant sector of family and private households, workshops, trade outlets, etc. can be created.

Co-operative enterprises and institutions in co-operative-socialist society will be different not only by their sizes and spheres of activity, but also by their social structure. Some co-operative enterprises will work exclusively at their own means of production. Other ones at the state means of production, leased on a contractual basis; for this, they will pay, together with income tax, rental payment to state budget. Still the other ones will work partly at the leased state means of production and partly at their own means.

Co-operative socialism, in combination with democracy, will not only put an end to the domination of bureaucracy, but will also eliminate a number of negative phenomena of modern Soviet society being the inevitable companions of state-bureaucratic socialism.

These negative economic phenomena of modern Soviet bureaucratic society include: crying, prodigious economic mismanagement in all fields of super-centralized state production and non-production sphere; low level (and rate of growth) of labour productivity, gross national product per capita and the living standard of labourers several times lower than those in advanced countries of the world; deficiency of labour force, high fluctuation of personnel, under-utilization of production capacity; paid write-ups and falsification of accounting; critical deficiency of dwelling space and lower level of its quality; bad quality of means of communication, especially of motor roads; large transportation costs; utter confusion, absence of any rhythm in the work of state passenger transport; extremely bad condition of telephone communication; inefficacy and unreliability of supplies of materials and machinery; rapid growth of over-normative stock of inventory holdings and their withdrawal from circulation; insufficient use of benefits of specialization; uneconomical spending of material (including natural) and labour resources; too long construction of new enterprises, dwelling houses and other objects; delayed mastering the new equipment; groundless and unbalanced wholesale and retail prices; chronic deficiency of some kinds of products and continuous over-production of the others; speculation, embezzlement, black market, corruption, and other forms of extraction of unearned incomes, i.e. the exploitation of labourers; backward tax system being a hindrance to economic and scientific and technical progress; utter absence of economic initiative, enterprise, collective socialist entrepreneurship; the availability of a huge, multi-million layer of population (especially among the bureaucracy) occupied by labour that is useless for society; mass abuses in the sphere of social consumption funds, improper use of the latter; permanent generation parasitical spirits owing to the availability of the system of state subventions; the existence of a great number of unprofitable enterprises and institutions; extremely low level of accomplishment of cities, towns and villages, their insanitary condition; oppressively low level of production and labour culture; the widest spread of hard hand labour and unhealthy conditions of labour in all the spheres of production; backward technics, technology and science; insufficient production of artificial materials; absence of small-size agricultural technics in farmlands; low crop capacity in agriculture, low milk yields; poor development of hothouse market-gardening, etc., etc.

The economic mismanagement in bureaucratic society, having reached the enormous magnitude in the USSR, can be explained mainly by the fact that functionaries, unlike businessmen in capitalist society and co-operators in co-operative-socialist society, take charge of not their own, but state-operated means of production (belonging virtually to the whole multi-million class of bureaucracy), and the material damage caused by unqualified, irresponsible and unconscionable functionaries gets covered not at the expense of specific initiators but at the expense of state budget, i.e. in the end at the expense of labourers. Therefore, however perfect the state centralized control, planning, price formation, remuneration of labour, sale and supply would be, it is impossible to put an end to economic mismanagement under conditions of state-bureaucratic socialism.

It is also impossible to improve the economic position of bureaucratic society, to do away with mismanagement and stagnation by means of transition of centralized state control of national economy from the principle of bureaucratic centralism, acting nowadays in the sphere of production control, to the principle of democratic centralism. Having replaced the bureaucratic centralism by democratic one, it is only possible to improve the operation of state centralized production; however, this improvement would be temporary and insignificant, because such a reconstruction would not change the very nature of state-bureaucratic socialism, since it would not eliminate the rule of bureaucracy: the latter would soon accommodate itself to the new form of centralized state control of economy and would, as before, hamper its development. And the labourers would, as before, stand aside the active economic and political life of bureaucratic society.

Only the transformation of bureaucratic enterprises and institutions to co-operative-socialist enterprises and institutions and, consequently, of state-bureaucratic socialism to co-operative socialism will put an end to mismanagement under conditions of socialism one and for all.

Only the market co-operative socialism, having replaced the total regulation by bureaucracy and its bureaucratic state of the whole economic life of society, the whole national economy (at that, the labourers are only screws of this mechanism) by wholesome socialist economic competition between co-operative, state, family and private enterprises and institutions, only co-operative socialism can reorganize the Soviet economy brought by the bureaucracy to complete stagnation and growing lag behind the most advanced capitalist countries.

Only the co-operative socialism, having replaced the economic and administrative coercion of labourers to work by real, not formal economic material interest in the results of labour (both for labourers and for bureaucracy), will enable the Soviet economy and Soviet society to overcome the stagnation and the lag behind the advanced countries by all economic indicators: labour productivity, production of gross national product per capita, level of real wages, housing conditions.

Only the co-operative socialism, having replaced the bureaucratic centralism (monopolized by bureaucracy) in state production control by democratic centralism in co-operative production control with participation of all labourers, will enable to bring socialist countries to the category of the most advanced countries of the world and then to overcome the advanced capitalist countries by all economic indicators.

Only the market co-operative socialism can lead the socialist economy out of deadlock, in the same way, as the market socialism with mixed economy, in the period of NEP, had led it out of the same deadlock, in which it found itself after the three and a half years (1917 to 1921) of existence of socialism with centralized production and equalizing communist distribution.

At the same time, the market co-operative socialism is only one of conditions of overcoming the stagnation, backwardness and mismanagement in socialist society and the domination of bureaucracy in it. Another condition is the democratisation of socialist society, since there cannot be economic activity without political activity, and there cannot be either political activity or elimination of rule of bureaucracy without democratisation of society, of which the sad experience of Yugoslavia testifies: there can be both economic backwardness, stagnation, and domination of bureaucracy under conditions of market socialism. To overcome the economic backwardness, the combination of market co-operative socialism and multi-party pluralistic socialist democracy is needed.

5. National debt in USSR.
Exploitation in Soviet society.
Forms of exploitation.


When considering the issue of the forms of exploitation of man by man in different socio-economic structures, including the last phase of primitive-communal society, we saw that there are three main forms of exploitation: production, trade and usurious. In the Soviet society, based on communal ownership of the main means of production, the main production form of exploitation is absent. However, the reality testifies that the socialist, including Soviet, society is not free from other, secondary forms of exploitation or, rather, their remnants; the most spread and the only legal form of exploitation is the usurious form. The extraction of usurious profit in the Soviet society is carried out by means of state bank or, rather, its affiliated branches in the form of saving-bank; money owners put up their money to save them or to have usurious interest.

The aggregate amount of money invested in Soviet saving-banks changed in the following way since 1946 to 1981 (according to modern rate): 1946 0.9 billion roubles, 1961 10.9, 1967 46.6, 1976 91.0, 1981 156,6 billion roubles.

The author does not have data concerning the following period; however, one can suppose that the total sum of investments reached 200 bln roubles in 1985. This enormous sum means that the Soviet state turned to the first-rate debtor (by far larger than Yugoslavia); the only difference is that Yugoslavia is the debtor of Western countries and it is due about 20 bln dollars, while the USSR is the debtor of its own people and it is due 200 bln roubles. This sum increases year by year, since people continue to invest money to saving-banks.

But even if new investments are not made, the national debt would rise anyway, because the sum of 200 bln roubles is annually added by usurious profit in the form of interest. If we suppose that one half of that huge sum is invested to time deposits with 3% of interest annually, while another half is invested to current deposits with 2% of interest a year, then the sum 200 bln roubles would be added by 5 bln roubles a year. The national debt of the USSR will increase by this very huge sum annually. In fact, the national debt of the USSR increases much faster. First, depositors continue to invest new deposits, at that they invest more money than they withdraw from accounts. Second, 3% a year is added not to one half of overall investments, but to major part of them, maybe, to 150 bln roubles or even more. And, third, the investments are added with not simple interest but with compounding. As a result, the national debt of the USSR increases not by 5 but by more than 10 bln roubles annually. During five years since 1976 to 1981, the national debt in the form of investments have increased by 65.5 bln roubles, i.e. by 13 bln roubles a year.

Those 5 or 6 bln roubles being added to 200 or more bln roubles of investments mean nothing but usurious profit in the form of money interest. And 200 bln roubles, that bring their owners the money profit at the rate of 5 to 6 bln roubles turn to nothing but money capital. 5 to 6 bln roubles of net profit, obtained by the owners of money capital of 200 bln roubles, represent the unearned income that is systematically extracted by the owners of money deposits.

The question may arise: if the extraction of unearned income on a such great scale and, consequently, the exploitation of man by man take place, then whom do the owners of money deposits-capitals exploit?

To answer this question, it would be enough, at first sight, to put a counter-question: whom do the money capitalists of modern capitalist countries exploit, when they invest their multi-million money deposits in capitalist, including state banks? Its easy to see that, both in capitalist and in socialist countries, the owners of money deposits exploit labour masses. But, in contrast to capitalist countries, the investors of money to saving-banks of socialist countries are labourers and this disguises the nature of exploitation. Lets try, nevertheless, to gain an understanding of this question.

All or nearly all the Soviet people have a job and get wages being their income. However, some part of them also gets additional income in the form of usurious money interest, while the remaining part of Soviet people does not have such an additional income. If the whole national income or, rather, the consumable part of it, is distributed exclusively according to labour contribution of everyone, then the exploitation of man by man would not exist. If all the Soviet people have deposits in saving-banks, at that, the latter being the same or nearly the same, then the exploitation of man by man would not exist as well, since the part of labour product (income), not paid to people in the form of remuneration of labour, would return to them another way via state budget and bank. But as long as some part of Soviet people has deposits in saving-banks, while the other part does not have them, we have quite a different picture.

To pay investors the interest (profit) for their deposits, the state has to underpay wages to all the labourers. If there are no deposits in saving-banks or if there are only a little of them, then it would not be necessary to find money for paying interest; as a result, the wages of all labourers would be higher. In reality, first, some part of money is being withdrawn from the aggregate wage fund; this money is, therefore, being underpaid to all the Soviet labourers. Then, some part of this money is being taken for additional remuneration of those labourers having money deposits in saving-banks. One could draw the conclusion, that the investors of saving-banks exploit those Soviet people not having the deposits. But this is not quite correct picture. In fact, the investors do not draw out their interest profit every year; this usurious profit is, as a rule, being added to their deposits-capitals, the latter, therefore, grows constantly. But this does not change the fact of the matter. After all, a depositor will, sooner or later, draw out his deposit; at that, he will have both initially deposited sum and an additional sum of money that is not earned by his labour. This sum of money, not earned by his labour, represents the profit, unearned income in the form of usurious money interest.

For more precise definition of the nature of usurious exploitation in Soviet society, one should bear in mind that the investors have deposits of different sizes. Some of them have deposits of several thousand roubles, the others several hundred thousand roubles, still the others only several hundred roubles. The depositor having 2000 roubles at time deposit in saving-bank will have money profit of 60 roubles a year. The investors having deposits of 200 roubles get only 6 roubles of profit a year, so it is simply ridiculous to call them exploiters. But the depositors having 200000 roubles in saving-banks (in the USSR, there are investors with deposits of more than one million roubles) will have the usurious money profit at the rate of 6000 roubles a year, or 500 roubles a month.

There are a lot of investors having deposits of such a size. Suffice it to say that one half of overall amount of deposits, i.e. more than 100 bln roubles, belongs to 3% of all depositors ( (Economics) magazine. 1982, #6). And if an average investor has a deposit of 1100 roubles, then an average investor of the above 3% has 18000 roubles. However, the deposits of these 3% of investors are not the same. Some of them have deposits at the rate of several thousand roubles, the other several dozen thousand roubles, still the other several hundred thousand roubles, and, finally, some of them have the deposits at the rate of above one million roubles.

If all the Soviet people have equal deposits in saving-banks, then the exploitation would not take place. On the assumption of overall amount of deposits of 200 bln roubles, the average deposit would be approximately equal to 1000 roubles. And this very sum of about 1000 roubles is the border, behind which the exploitation of man by man begins. The investors having deposits at the rate of 1000 roubles do not exploit the others and are not exploited by the others. They simply return, by means of saving-bank, the part of their income that was underpaid to them in the form of wages.

But those investors having deposits at the rate of above 1000 roubles, not only return the underpaid part of wages but also extract an additional income. Consequently, they are exploiters. They exploit the Soviet labourers who have deposits less than 1000 roubles and, especially, those not having deposits at all.

So, why does not the state eliminate the payment of interest on deposits, if, by means of it, the exploitation of man by man takes place? After all, this contradicts the nature and morality of socialist society, its social structure! Besides, the charge of interest on deposits leads to disastrous increase of national debt of the USSR.

We have already seen, that the leaders of the country, concerning this question, proceed from the idea of economic expediency, not the idea of justice. It is considered economically expedient to withdraw money funds from circulation, to build new enterprises, to expand the existing ones or to carry out their technical reconstruction, using this money. But is it so? It is a complex issue; it needs thorough consideration, investigation and discussion. The national debt of the USSR grows constantly.

Nowadays, it is approximately equal to 200 bln roubles. Very soon it will reach 400 bln roubles, then 1 trln roubles. And what next? How can the Soviet state pay out such enormous sums? If the national debt is equal to 1 trln roubles, the state would have to pay 25 to 30 bln roubles a year only in the form of interest. Is it necessary to take urgent measures for gradual decrease of this debt?

The most interesting point here is the fact that, on the one hand, the state, paying out interest on deposits, as if encourage Soviet people to buy less commodities in the shops and services at public service establishments, but to collect more money in saving-banks. On the other hand, the state, selling a great number of commodities (including deficient ones) on credit with low interest, as if encourage the same Soviet people to buy more commodities and, consequently, to collect less money in saving-banks.

So, where is the logic? If the state wants to sell more commodities and services, then why does it pay interest on deposits? If interest is not paid, people would invest less money in saving-banks and, consequently, buy more commodities. And if the state wants to sell less commodities, in order to attract money to saving-banks and, via the latter, to state budget, then why does it sell commodities (especially, deficient ones) on credit with low interest? The impression may appear, that the state wants both one and another. But these tendencies are mutually exclusive. Would it be better to achieve the above goals, on the one hand, by means of cancellation of charging interest on deposits in saving-banks and, on the other hand, by means of substitution of promotional interest when selling commodities on credit for standard interest of 5 to 10%? The final result would be the same, but, first, the rate of growth of national debt would be lower (maybe, the debt would begin to decrease gradually), and, second, the possibility to eliminate the usurious exploitation of man by man in the Soviet society would appear.

But, perhaps, both paying out interest on deposits and selling commodities on credit with promotional interest are necessary in the name of man and for the good of man? Its difficult to believe that the exploitation of man by man is necessary for the good of man, but its easy to see that the exploitation is necessary for the good of exploiters. And for the good of simple Soviet people, one can take other, more simple measures, for example, to increase their wages and some hardship allowances or to improve their housing conditions being very bad for a long time, etc.

The usurious exploitation is the main but not the only form of exploitation in the Soviet society. The large-scale exploitation in black market by means of extraction of trade profit by traders-speculators takes place. The chronic deficiency of many commodities and services is the social basis for trade exploitation in the Soviet society. Many thousands of commodities (now these, now those) are permanently absent in trading network of the country, that enable traders to buy them up in shops and supply depots and to resell them to buyers with extra charge of 20, 50, 100 and even 200% extracting great trade profit.

Hundreds and thousands of various commodities are permanently found in the category of deficient commodities. They are absent on shop counters for months and years, sometimes for many years. And many of these commodities: industrial ones and food-stuffs, articles of prime necessity and luxury goods, cheap and expensive commodities become objects of buying-up and resell by the traders of black market. The traders are being treated with drastic laws, they are being arrested, brought to the court, put into camps and prisons, their property is being confiscated, but the traders and black market prosper as before. And they will prosper, because the economic basis of black market and speculation deficiency of commodities is intact. While the deficiency of commodities and services exists, it is impossible to put an end to black market and extraction of trade profit. Any repressive, police measures lead only to the increase of extra charges for scarce commodities.

If, for example, by means of cruel repressive measures, the state manages to halve the number of traders and, correspondingly, the number of goods resold in black market (improbable as it is), then the extra charge of remaining commodities would rise sharply approximately twice. And the aggregate trade profit, extracted by all the black market traders of the country, would remain approximately the same. But the buyers of black market commodities would have to pay doubled extra charge, since the demand for scarce commodities would significantly exceed the supply owing to the reduction of amount of such goods. The remaining traders would extract doubled profit per trader. This is, in a way, an extra remuneration for risk.

Its hard to say, how much annual aggregate profit is being extracted by all the black market traders of the USSR, but one can say with certainty that it can be counted not by millions but by billions. Most probably, that the aggregate trade profit of traders is approximately equal to the aggregate usurious interest profit of saving-bank depositors being equal nowadays to several billion roubles a year.

In order to put an end to exploitation of population by black market traders, it is necessary to do away with deficiency of commodities and services; the latter could be done by means of exclusively economic measures, namely: the reform of price formation, according to which, the main factor of price formation should be not the factor of prime cost or price of production, but the factor of demand and supply. At that, the wholesale and purchasing prices should depend upon retail price, and not vice versa; the production costs as a whole should determine the level of prices of commodities in accordance with the law of value, but prices should promote the reduction of production costs as well.

The increase of retail, wholesale and purchase prices of scarce commodities would be conductive to interest of all the enterprises in production of scarce commodities and to reduction of production of goods that are not in demand. It should be noted that the increase of production of scarce commodities, that will inevitably follow the rise of their prices, will lead soon to exceeding the supply over demand; the latter will cause, in turn, the drop in prices and, consequently, income and average wages of collectives of these enterprises approximately to the previous level. And cutting down the production of commodities being not in demand will shorten the supply; as a result, the prices will rise. In the end, all these factors will cause the leveling of average wages of collectives of different enterprises; it will take place automatically, in accordance with the economic law of price of production, without any intervention of state that rather prevents, hampers this process, than promotes the elimination of deficiency of many commodities and services.

Such is, in short, the only way of resolving the problem of deficiency of commodities, black market, speculation and the exploitation of population by traders; the way that, in contrast to the method of centralized price formation, proved to be efficient in the struggle against the above negative phenomena of socialist, including Soviet, society.

In addition to usurious and trade forms of exploitation, such a specific form of exploitation as corruption became widespread in the Soviet society in recent decades, especially in 1970s. A great number of court examinations, both public and closed, at which, bribe-takers and those who like to live at the expense of state treasury are being tried, testifies to the fact that the corruption is very popular nowadays. This is also proved by the significant fact that the dock is sometimes occupied by very influential Soviet citizens, including the representatives of the highest social layer of Soviet society managerial staff of state enterprises and institutions: ministers and their deputies; professors and lecturers of universities, taking large money bribes from entrants for illegal matriculation; doctors, accepting bribes for good treatment; officials of passport departments of militia for registration of non-residents in one or another city; members of state committees for commissioning the objects being built for pre-term acceptance of unfinished objects; managers of enterprises and establishments for machination at distribution of housings, and many other citizens of various occupations and posts, including the highest ones.

The wide spread occurrence of corruption and other negative phenomena (for example, alcoholism) during recent 15 to 20 years points to a certain moral degradation of Soviet society; the latter is a conclusive proof of the fact that the Soviet economy and Soviet society are in need of a number of reforms and measures aiming at their recovery.

6. Economic laws and economic contradictions.


We have seen above, that the economic development of society at any stages of its development takes place under the influence of universal economic laws the most significant of which being: a) the law of correspondence of the degree of production centralization to the level of operational division of labour; b) the law of correspondence of commodity market size to the level of social division of labour; c) the law of correspondence of labour productivity to the level of peoples needs; d) the law of correspondence of socio-productive relations to the nature of labour of the majority of labourers; e) the law of value (price of production).

The above economic laws exert their influence also upon the modern socialist, including Soviet, society, upon its economic development. The economic theory and practice of economic policy of socialist countries testify that in the countries, where the above economic laws are ignored and violated, the economic contradictions appear; the greater are the neglect and violation of economic laws of development of society, the sharper are the negative phenomena being the reflection of these economic contradictions.

The economic contradictions in the Soviet economy, having strengthened sharply during recent 15 years, become apparent in the form of a number of negative phenomena and tendencies, among them:
  1. abrupt decrease of growth rate of labour productivity in social production and, consequently, other economic indicators: growth of gross product, remuneration of labour, improvement of living conditions, etc.;
  2. low quality of products made by Soviet enterprises and, as a result, their low competitiveness on the world commodity market;
  3. lack of labour force in social production and, as a result, high level of labour fluidity and low level of labour discipline;
  4. deficiency of many commodities, including food-stuffs, in the sphere of trade and, as a result, wide spread occurrence of black market, embezzlement and corruption.


Lets consider, in what way the economic laws cause the economic contradictions and negative phenomena in the Soviet economy. As we have seen above, the economic law of correspondence of the degree of production centralization to the level of operational division of labour (and it is the mostly violated law in the Soviet economic life), in the course of historical development of society, manifested itself many times in the form of grandiose transformations in the economy of one or another society in one or another epoch.

These economic reforms took place, when the contradiction being the expression of violation of correspondence between the centralization of production and the level of operational division of labour became especially acute. And those economic reforms each time brought the level of centralization of production into accord with the level of operational division of labour achieved in given historical epoch in the leading branch of one or another country. And the restoration of correspondence between the centralization of production and the achieved level of operational division of labour opened the broad space for further rapid development of productive forces of society, for quicker growth of social production.

The first such reformation was carried out in primitive-communal society, when tillage agriculture, in the course of agrarian-technical revolution, was becoming the main branch of economy. The fields that were previously cultivated jointly, had been divided into separate plots and passed over to individual (family) use. There happened the decentralization of agricultural production promoting more rapid development of agriculture and the economy as a whole.

The second large reformation occurred in Ancient Rome at the turn of second century AD, when the large Roman latifundia were eliminated, while the land in the form of single plots was leased to slaves and free peasants. Decentralization of agricultural production in Rome was also conductive to quicker economic development of society.

The third similar transformation was implemented in medieval Western Europe in the period of industrial-technical revolution, when the decentralization of shop industrial (handicraft) production took place. The elimination of petty regulation of the activity of single workshops from above, from the direction of shop hierarchy contributed to acceleration of industrial-technical development of Western Europe that took the lead over Eastern Europe in economic development, though, of course, that was not the only reason of quicker development of Western Europe.

In all the above cases, decentralization of production was carried out, that brought the level of centralization of production into accord with low level of operational division of labour, both in ancient agriculture, and in medieval industry. The decentralization was needed, because in all the above cases the production turned out to be too centralized for existing low level of operational division of labour; as a result, the initiative of labourers was restrained and the development of production was hampered.

However, at the turn of XIX century, when, during a short historical period, the fourth similar reform was implemented, not decentralization but, on the contrary, further centralization of production took place; as a result, small and medium industrial enterprises began to amalgamate into bigger joint-stock companies. This happened, because the level of operational division of labour rose quicker than the size of production, so that the new discrepancy between them appeared, that was resolved by means of agglomeration of industrial enterprises.

In the course of socialist revolutions in a number of countries, all or almost all production in them, owing to the subjective (ideological) factor, had been centralized within the bounds of each state. This caused the sharp discrepancy between too high centralization of social production (especially in the USSR) and comparatively low level of operational division of labour. After all, the level of operational division of labour, though having increased sharply during the recent decades, could not keep pace with such a momentary growth of centralization of production, when all the enterprises of the country, the whole social production was consolidated into one enterprise, into one factory being controlled from one center: government and its ministries.

The contradiction between the relatively low level of operational division of labour and the excessive centralization of social production is especially evident in the USSR with its large population and, consequently, huge scale of production. And in the course of quantitative and qualitative growth of Soviet social production and, therefore, its further centralization, this contradiction becomes more and more acute with every decade, with every year.

There were phenomena in the recent history, when the grandiose processes of either centralization or, on the contrary, decentralization of social production in socialist countries took place. The centralization of production, as a rule, took place in the course of revolutionary transformations in one or another country. But the practice demonstrated very soon that the excessively centralized production, especially in agriculture, is inefficient and the attempts (both successful and not) to decentralize the social production were made.

The first such attempt to decentralize production was made in Soviet Russia in 1921, when Lenins government turned from centralized and equalizing socialism (military communism) to NEP. One could say that the decentralized production under NEP in 1920s had saved Russia (the Soviet Union) from starvation. However, the decentralized production existed for several years only. At the end of 1920s, the total centralization of the whole social production, both in industry and in agriculture, was implemented again; this system of production, with small and insignificant changes, continues to exist up to the present time.

At first, in 1930s and 1940s, when the industrialization of society was implemented in the country, the strict centralization of social production was not felt intensely. But, after the industrialization, the excessive centralization began to be more and more noticeable; this problem became especially perceptible during the recent 15 years, that is bound up with: first, strengthening the centralization of production at the end of 1960s, second, growth of scale of industrial production, third, accomplishment of the scientific and technological revolution, and, fourth, increase of educational and cultural level of population.

The social production in the epoch of scientific and technological revolution cannot develop rapidly being entangled in hundreds of limitations, directives, instructions, orders, etc., the continuous flow of which comes to every enterprise from the centre. The strict centralized control of huge Soviet social production from one centre rather hampers the normal work of enterprises than promotes it.

The second attempt of decentralization of production in socialist countries had been successfully made at the beginning of 1950s in Yugoslavia. It is well known that Yugoslavia, in post-war period, had the highest rate of growth of production among the socialist countries, especially in industry.

Recently, the decentralization of social production is carried out in two more socialist countries: Hungary and China. The results of production decentralization in these countries are so impressive that, without a doubt, the USSR would fall behind them, if the decentralization of production has not been implemented here.

The USSR is already behind Hungary by economic indicators per capita. Lets cite some comparative data on success of the USSR and Hungary in this field. The production of meat per capita in the USSR was 41 kg in 1965, now it is 87 kg. The production of meat per capita in Hungary was: in 1950 67.2 kg, in 1960 81.7 kg, in 1981 144 kg. Hungary is now second, after Denmark, country of Europe by production of meat per capita.

The crop capacity of cereals in the USSR was 13.7 centners per hectare, now it is 16 cent. The crop capacity in Hungary grew in the following way: 1950 10.3, 1960 19.6, 1980 36.1 cent per hectare. At that, in 1980, the crop capacity of wheat was 47 cent, that of corn 50 cent.

The production of grain per capita in 1981 was: in Hungary 1330 kg, in the USA 1266 kg, while that in the USSR is equal, in average, to 700 kg; only sometimes this indicator is somewhat bigger. Hungary is in the top five countries of the world by the crop capacity of wheat and corn. And what is the place of the USSR in this list?

The indicators of milk yield are not less impressive. The milk yield per cow in the USSR was 1853 kg in 1965, now it is equal to 2094 kg. And the milk yield in Hungary was 1863 kg in 1960, now it is more than 3777 kg. (25)

China, of course, remains behind the USSR yet, but if the economic policy of the USSR is not changed, China would soon overtake our country, first, by absolute gross product and then also by gross product per capita, since, in recent years, the pace of economic growth in China is several times more than that in the USSR. The higher rate of economic growth in Yugoslavia, Hungary and China is conditioned by their decentralized production, while the Soviet social production is hampered by its excessive centralization.

The Soviet economy can be compared with a car in which accelerator pedal is connected rigidly with brake pedal. You push the accelerator pedal to speed up the motion of the car, but, simultaneously, you press the brake pedal as well. As a result, the car does not speed up, but begins to move jerkily and obeys badly. To move quicker, you must release acceleration pedal from brake pedal. For the Soviet economy to develop more rapidly, to move ahead, it must be released from excessive, rigid state centralization that hampers it. At that, we should use the positive experience of Yugoslavia, China and, especially, Hungary in this field, rejecting everything that is unacceptable for us, for example, unemployment, inflation, external debt, etc.

Recently, it is often said that economic stagnation could be got over by means of technical reconstruction of industry, introduction of new technics and technology. No doubt, it is right. However, technical reconstruction, introduction of new technics and technology could only bring significant economic result, if the social production, including industry, is decentralized. If the technical reconstruction is carried out under conditions of excessively centralized production, then we should not wait for considerable economic result. The experience of Soviet agriculture is the best evidence for it.

After 1968, when the Soviet leaders held up the process of decentralization of social production, initiated in 1964 1965; another decision was taken to follow the path of accelerated technical reconstruction of agriculture. According to this task, enormous funds were invested into agriculture. During the period since 1971 to 1975, a tremendous sum of 130 billion roubles has been spent to satisfy the requirements of agriculture. And what about results? Maybe, the crop capacity of cereals rose, as it was the case in Hungary during the same period?

Nothing of the kind! Both crop capacity and total yield of cereals remained the same. In 1980s, from year to year, the total yield of cereals in the country is less than 200 mln tons. But in 1960s, i.e. before those tremendous investments into agriculture being done in 1971 to 1975, total yield was sometimes more than 200 mln tons.

The same will happen in the future to enormous investments into industrial production and other branches of social production. They will not bring due effect, if the technical reconstruction is implemented under conditions of excessively centralized social production. To get the return from funds invested, it is necessary to decentralize the social production. Why is it in Hungary, that the rapid economic growth of agriculture takes place in recent decades? Because it is in Hungary that the profound decentralization of agriculture had been done. In other socialist countries (except Yugoslavia and China), agricultural production remains to be centralized, and, consequently, economic stagnation or even reduction of output take place as before.

On the other hand, a question arises: why have Hungarian labourers achieved the main their success in agriculture? Because it is in agriculture that the decentralization of social production has been implemented in the most profound and consistent way. If the decentralization of social production is carried out so consecutively in other branches of Hungarian economy, then we could expect much more success than it is today.

And if the decentralization of social production, similar to that in Hungary, is accomplished in the USSR, then our country would achieve the same impressive success, as the agriculturists of Hungary have done.

Of course, it is impossible to foresee all the difficulties that may arise in process of decentralization of production, but, first, we could avoid some part of these difficulties, if we study the experience of functioning the decentralized production in Yugoslavia, Hungary and China. Second, decentralization of social production could be done in stepwise manner: by branches and territories (ministries and republics). And, third, the arising difficulties could be obviated in the course of reforms.

It should be noted that the decentralization of production would not bring the desired results, if the reform of taxation has not been done simultaneously. The existing taxation system, in particular such a tax as assignment to state budget of free remainder of profit of enterprises (if it could be called a tax at all), would nullify the results of decentralization of production. For the decentralized production to function successfully, it is necessary to replace all the existing taxes by the tax for state production facilities (rental payment) for all self-supporting enterprises and institutions, as well as progressive income tax. The necessity of decentralization of social production in the USSR and other socialist countries with centralized economy is stipulated by the economic law of correspondence of the level of centralization of social production to the level of operational division of labour; on violation of this law, the discrepancy between the centralization of production and the level of operational division of labour appears; it shows itself in the form of economic stagnation and negative economic phenomena.

One more economic contradiction (though being less acute, especially for the USSR) appears in socialist countries under the influence of another economic law the law of correspondence of the size of commodity market to the level of social division of labour. This law shows itself in the fact that large specialized enterprises, especially in small countries, often have difficulties with the sale of their production on confined commodity market. So they have to change their product range frequently or to produce several or many different articles simultaneously increasing the material production costs, lowering the labour productivity and reducing the income of their labourers. It could be avoided, if these enterprises have the free access to commodity markets of other countries for selling their products. The obstacle here is (at least, in the USSR) the state monopoly of foreign trade.

The Soviet economy does not need protection from competition with foreign enterprises; on the contrary, it should be sanified by means of competition with other, especially Western, enterprises.

Owing to the state monopoly of foreign trade, Soviet enterprises are in hothouse conditions and, consequently, cannot be competitive on the world commodity market. And the competition with foreign enterprises would lead not only to sharp improvement of quality of products of Soviet enterprises, but also to introduction of new and up-to-date technology and technics, including computer machinery, that would greatly promote the increase of labour productivity and other economic indicators.

Of course, it is impossible to abolish the state monopoly of foreign trade at once. Before it is cancelled, it is necessary to decentralize the production and to reform the taxation system. Then, in some period after the completion of production decentralization, we could cancel the state monopoly for trade with socialist countries giving the Soviet enterprises and institutions the opportunity to trade directly with enterprises of foreign countries by-passing the state foreign trade organizations and enterprises. In some time, say, several months, we could cancel the state monopoly for trade with countries of Third World: Asia, Africa and Latin America. In some more time, we could give the Soviet enterprises the right to trade with enterprises of Western Europe and, finally, with enterprises of the USA, Canada and Japan.

After the abolition of state monopoly of foreign trade, the commodities being imported into the country could be, at first, in case of need, charged by a tax (duty) in order to protect domestic commodities; then these duties could be reduced and, in the course of time, cancelled at all.

One more large economic contradiction in the Soviet economy is connected with violation of the economic law of correspondence of socio-productive relations to the nature of labour of majority of labourers.

In the course of scientific and technological revolution, the nature of labour of producers of material values changes in such a way that the labour of bigger and bigger number of labourers becomes exclusively or predominantly creative labour. But the labour of the majority of labourers will become creative only at the last, final stage of scientific and technological revolution. However, the Soviet economy is only at the initial stage. And the labour of major part of labourers is still not of creative nature.

That is why the main stimulus to labour should be material, not moral stimulus; the latter often turns imperceptibly to administrative compulsion. At that, the collective material stimulus, i.e. common stimulus for collective of one or another enterprise or institution, their associations and parts, subdivisions, should be the main one. Private and national (or branch-wise) material stimuli should be of secondary importance.

In the Soviet economy, the most important is the national material stimulus that is identical to moral stimulus. The second position is occupied by private material stimulus that is, most often, of formal nature. As for collective material interest, it is not only of formal nature and plays an insignificant role, but is often absent at all. This is proved by the fact that different labourers of one and the same enterprise or establishment have significantly different wages, while the average wages of collectives of different enterprises, especially in one and the same branch, are almost the same. If, in process of planning the level of remuneration of different labourers of one and the same enterprise, the principle of differentiated distribution of income is followed, then in the course of planning the levels of average remuneration of collectives of different enterprises, especially of one and the same branch, the principle of equalizing distribution of income is used.

The central leadership takes the most resolute measures, not to allow the incomes of various labour collectives to be differentiated. And this hampers the initiative of the latter, because they do not have collective material stimulus and, therefore, they do not show enough initiative for economic development and growth of enterprise: expansion of production, increase of labour productivity, introduction of new technology, etc.

The main tool for retention of equalizing distribution of incomes of different collectives of enterprises is the taxation system. The differentiated system of taxation enables the state to take away the surplus of income from any enterprise, reserving it just as much as it had been planned beforehand. This can be done by means of different tax rates for production facilities of enterprises, that can be varied arbitrarily, and especially by means of assignment of free remainder of profit of enterprises to state budget.

The existing taxation system restrains all the Soviet economy, makes it clumsy, awkward, non-competitive on the world commodity market, so that the products made at the Soviet enterprises have to be sold on the world market, as a rule, at the prices that are lower than their production costs.

The modern taxation system is arranged in such a way that the state, in fact, pays the labourers of enterprises the wage fund being determined and planned beforehand, while everything that exceeds this sum is being withdrawn to state budget by different means. This is, in a way, money allotment, similar to food allotment of centralized equalizing socialism in 1917 to 1921 and money-food allotment in 1930s and 1940s.

The taxation system should be changed in such a way that all the self-supporting enterprises and institutions pay to the state budget the pre-determined, planned tax (rental payment) evaluated as some percentage of value of state production and non-production funds and means being in termless use of collectives of these self-supporting enterprises and institutions: basic production assets, circulating assets, available land, housing facilities, monetary funds.

The rate of progressive income tax should be changed depending on correlation of average remuneration of one or another collective and the average remuneration of labourers of the whole country. If the average remuneration of one or another collective exceeds the average remuneration in the country, then the tax rate should increase slightly. If the average remuneration of a collective is lower than the average remuneration in the country, then the tax rate should be less than standard tax rate.

The remaining part of income of self-supporting enterprises and institutions should remain at the disposal of collectives that use it at their discretion. In other words, in the sphere of taxation and finances, the transition from money allotment to money tax, a sort of new NEP, should be carried out.

If the income of collective of some advanced enterprise increase sharply, then the additional income (in comparison with previous income or with other average enterprises) can be distributed between the collective and the state (between the remuneration fund and the sum of tax) by different ways. The whole or nearly the whole additional income could be withdrawn to the state budget by different means and on various pretexts. In the USSR, during the whole its history (except the period of NEP in 1920s), distribution of additional, above-plan income (profit) was carried in that very way with insignificant changes and distinctions. However, such a disproportionate distribution of additional income leads to opposition of interests of collectives and the state, since it is realized exclusively or preferably for the sake of one side the state; at that, the interest of another side (the collectives) is disregarded, that hampers their initiative.

On the contrary, the whole or nearly the whole additional income of the collective of an advanced enterprise could be left at its disposal, transferring to the state budget one and the same sum of money every year; this sum will only rise gradually according to the increase of value of production facilities belonging to the state, but it will not rise according to the increase of income of enterprise, appearance and growth of additional, above-plan income. But such a distribution of additional income also leads to opposition of interests of the collective and the state, but in reverse direction. In such a case, the state would not be interested to expand this very profitable production, it would be all the same for the state, where to make new capital investments. Besides, such a system of taxation would lead to excessive differentiation of average remuneration of different collectives, especially of fund-capacious enterprises.

In order to combine the interests of collective and state harmoniously, the additional income of enterprises should be distributed between the collectives and the state by means of tax legislation.

At such a system of taxation, both main criteria of efficiency of work of s

ingle collectives of self-supporting enterprises and institutions rate of growth of net remuneration (living standard) of labourers of collectives of one or another enterprise or establishment and the pay-back period of state production and non-production funds and means being handed over for use of this collective will not come into implacable contradiction with each other, as it is often the case nowadays, but will be in constant harmony. At those enterprises having higher average remuneration of labourers, the payback period of state funds will be shorter. On the contrary, at the enterprises with longer payback period, the average remuneration of the collectives of labourers will be lower.

Only such a system of taxation will take account of both interests of single collective and the interests of society as a whole and thereby in the best way promote the rapid economic development of the country. But it could be effective only being combined with decentralization of the whole social production.

The above economic contradictions have caused, during the last 15 years, the sharp reduction of the pace of economic growth of Soviet economy, including, first of all, the labour productivity. This tendency sharpens the economic contradiction between the growth of needs of Soviet people and the level of labour productivity, because the needs grow faster than labour productivity does. The rate of growth of labour productivity, low as it is (about 2% a year during the last decade), is often fictitious. This can be achieved in two ways. First, during frequent insignificant modifications of products, the production costs of new product is being artificially overstated, thereby creating the great reserves for further growth of labour productivity. Such modernization of products is frequently being carried out for this very purpose.

The second method, effective and primitive simultaneously, consists in the following: in the absence of real growth of labour productivity, in the course of just another campaign for the increase of labour productivity or at the end of just another year, when the totals of activity of enterprise and its subdivisions is summed up, the output quotas of workers are being revised with the object of increasing them, and the victorious reports are being sent to the ministry: the collectives of communist labour, having joined in the socialist competition, have fulfilled the plans of growth of labour productivity ahead of schedule, etc., etc. However, simultaneously with the increase of output quotas, the prices of piece-works are being reduced. This can lead to the reduction of remuneration, since the real growth of labour productivity is either absent at all or insignificant; the consequences are, for example, the growth of labour fluidity, worsening the labour discipline, etc. To prevent this, the managers of enterprises and their subdivisions, as well as the employees of departments of labour and remuneration accounting write out a great number of fake, fictitious orders for work, the cost of which, on the scale of the whole country, amounts to, probably, billions roubles a year.

If all the managers, with the consent of which the fictitious orders for work is being written out, are called to criminal responsibility according to criminal legislation, then the major part of (or the whole) managerial personnel would sit on the dock. But this will never happen, partly because the utter prohibition of upward distortions would cause the sharp drop of indicators of labour productivity.

To satisfy the ever growing needs of people, it is necessary to increase the labour productivity constantly. And for sharp increase of growth rate of labour productivity, it is necessary to reform the Soviet economy from top to bottom. It is necessary to decentralize the social production, to reform the taxation system, to eliminate the state monopoly of the foreign trade gradually. Besides, it is necessary to reduce sharply and then to continue the gradual decrease of the state subventions; they should be substituted, where necessary, for granting credits to self-supporting enterprises and institutions: industrial, building, agricultural, transport, communicational, commercial, service, maybe also to scientific and design institutes, publishing houses, medical institutions (in case of out-patient treatment in polyclinics, some small pay can be taken from patients; in case of hospital treatment from the enterprises at which patients work), housing organizations (with simultaneous increase of residential rental and remuneration of labour), and, maybe, to some other enterprises and institutions.

The necessity to refuse from the policy of state subventions is conditioned by the need to put an end to equalizing redistribution of incomes and to eliminate parasitical spirits of some labour collectives and their managers.

Apparently, it is necessary to carry out a reform in the field of remuneration of labour: to improve the basic wage (in particular, to eliminate the upward distortions) and additional wage (bonuses): to replace the twice-a-month wage payment (advance and final payment for last month) by weekly accounting and payment of remuneration, etc.

However, it should be noted that, in the course of decentralization of social production, it is expedient to resolve the problems of improvement of remuneration of labour in a decentralized manner; the decisions of government in this field should, obviously, be of recommendation nature. Without a doubt, each collective will establish such a system of remuneration of labour that will be the most acceptable and efficient for stimulation of labour and the growth if its productivity, for introduction of new technics and technology, and for the increase of quality of products being made. Since, in the decentralized production, the role of main engine of economic progress is played by material collective interest and the creative work of masses. The government and state authorities should only supervise the process of accounting and payment of remuneration at enterprises and institutions, suppressing any illegal machinations in this field.

The centralized planning the remuneration funds of enterprises and institutions hampers the initiative of their collectives, because, in case of significant over-fulfillment of plan, the advanced collective of one or another enterprise or institution would get an increased wages only temporarily, during some months. Then it receives a new, increased plan, in which all the economic achievements of this collective are taken into account, while the remuneration fund remains the same, on a level with the other enterprises.

But the new, increased plan is much harder to fulfill, since a significant part of production reserves is already used, and the collective faces the threat of frustration of new, increased plan with all unpleasant consequences following from this, including the threat to be deprived of bonus for the whole collective or, at least, for managerial personnel. And having not fulfilled the plan in some month for certain reasons of objective and subjective nature, against which no one is insured, this advanced, as compared to other enterprises, collective would not get its bonus, and its wages would be lower than that of other collectives working according to the principle: do not fall behind, but do not run ahead.

Everyone knows that such an unpleasant possibility waits for those working better than the others, therefore everyone tries not to run ahead, but to keep step with the others, creating and retaining as much as possible production reserves. Everyone tries to be like the others, to be ordinary, to be plain.

Before the WWII, during the first five-year plans, the rates of output and plans were sometimes over-fulfilled by hundreds per cent; after the war, in 1940s and 1950s, the plans were over-fulfilled by dozens per cent; in 1960s, collectives of enterprises fulfilled the planes by 102, 105, sometimes by 110%. Nowadays, the production plans are being fulfilled, as a rule, by 100.1% or 100.2% or, maximum, by 100.3%. Over-fulfillment of the plan by 1% only is considered the same trouble and error of managers as under-fulfillment of the plan.

And one of the reasons of this phenomenon, though not the only one, is the centralized planning the remuneration funds of enterprises and institutions on the basis of equalizing distribution of national income between collectives of enterprises and institutions, that work (and, the more so, can work) differently. Such a situation can only be eliminated by means of above reforms, according to which, different collectives of labourers working differently should get different remuneration. And one of these reforms should be the reform of decentralization of remuneration of labour. These reforms will enable to sharply increase the rate of growth of labour productivity and, thereby, to eliminate or significantly reduce the contradiction between the high level of needs of Soviet people and the low level of productivity of their labour.

7. Negative phenomena in Soviet economy and society.


Among the negative phenomena in the Soviet economy and Soviet society there are: crying mismanagement in all the fields of social production and non-productive sphere; low rates of growth of labour productivity, gross national product (especially, per capita), living standards; acute deficiency in dwelling; low quality of products being made by enterprises; lack of labourers at enterprises and institutions; high level of labour fluidity; upward distortions during accounting wages; deficiency of great number of commodities in trading network; speculation, black market, embezzlement, corruption; and above all the alcohol boom during recent 15 years.

The industrial production of alcohol is the only section of social production in the USSR during the last 15 years, that does not reduce the rate of its growth; on the contrary, its growth goes on speeding up year by year. We have reached a great success in this field, having left behind all or almost all the countries of the world by the volume of production and amount of consumption of alcohol per capita. What is the reason of such an unprecedented alcohol explosion?

Some people say that the reason is the low living standard. But previously, especially before the WWII, the living standard was still lower, but there was no mass alcoholism. Besides, the living standard in many countries of Asia, Africa and Latin America is lower than that in the USSR, but there is no such a rapid growth of alcoholism there.

Others say that, on the contrary, the alcoholism is growing, because people began to live better and have a lot of money; however, the living standard in the countries of Western Europe and Northern America is 2 to 3 times more than that in the USSR, but there is no such an alcoholism in that countries. Besides, if we suppose that alcoholism inevitably rises with the increase of living standard of Soviet people, then in future, when the living standard has increased 2 to 3 times (after all, it will happen some day), the Soviet people will utterly degrade as a result of alcohol intoxication. This is too terrible supposition; such a prospect for future is unacceptable for us.

The third group of people asserts that alcoholism is a consequence of low level of organization of rest, of spare time. People drink because they do not know what to do, how to kill their rest time. There is a grain of truth in it, but it is not the main reason. After all, the 41-hour working week existed already in 1930s; moreover, the level of organization of leisure was still lower then, but there was no such a universal habit to drink.

The fourth group says that Russian population has been drinking for ages. But this is a barefaced lie. First, since 1914 to 1925 there was a prohibition law in Russia and people drank not much. Second, as we have already said, the alcohol boom is observed during the recent 15 years, when the production and consumption of alcohol drinks per capita had increased several times. At that, some Soviet people spend more than 50% of their wages for buying alcohol drinks.

The fifth group argues that alcoholism is just a bad habit; it is quite enough to limit the sale of alcohol drinks and alcoholism will begin to decline and disappear at all. But the question may arise: why does this bad habit tend to increase not to decline during the recent 15 years?

The existence of all the peoples habits is determined by the social environment of one or another human society: being determines consciousness. In some social conditions, one or another habit goes down and disappears in the end; in other social conditions, the habit retains approximately at the level; but there are favourable conditions, in which this habit becomes stronger. If alcoholism in the USSR began to grow rapidly in recent 15 years, then the social conditions of Soviet society of that period became favourable to this bad habit. Alcoholism is a social disease; it is to be cured by social measures, since it is impossible to heal this social disease only by means of limitations and repressions. If we cease to sell cheap fruit-and-berry wines, then people would drink more expensive vodka. If we cease to sell vodka, then people would drink rectified alcohol and home-brew (samogon). If we manage, by means of some cruel police measures, to decrease the production and consumption of samogon, then people would drink other drinks containing alcohol: polish liquid, methylated spirit, cheap eau-de-Cologne, perfumes, etc. Limitations and repressions would help to eliminate mass alcoholism, only if the social measures are taken simultaneously. But, first, it is necessary to find out, why the Soviet people drank within reasonable limits before and why they began to drink beyond all measure in 1970s.

One can answer this question in such a way: previously, in the course of several decades, a considerable part of Soviet people had clear and high (from their points of view of that time) aims and people strived for them. There are no such aims now. And life of the majority of Soviet people turned to colorless, dull, plain existence without high purport bringing no satisfaction.

In recent times, many people had great aims, such as: the accomplishment of revolution in 1917; victory in the civil war 1918 to 1921; reconstruction of economy destroyed during the World War I and the civil war; elimination of economic calamity and poverty in 1920s during NEP; collectivization of agriculture at the turn of 1920s; cultural revolution; industrialization of the country in 1930s; victory in the Great Patriotic War (WWII); reconstruction of destroyed economy in 1940s; formation of the world socialist system in 1940s and 1950s. At the turn of 1950s, a new great aim was put forward: to overtake and outstrip the advanced countries of the world, including the USA, by all economic indicators in the nearest 15 to 20 years. Still more grandiose aim was formulated in 1961 at the XXII congress of the CPSU: to build the higher phase of communist society communism in the USSR by 1980.

All the above aims were fulfilled by turns, thereby raising the moral and political spirit and enthusiasm of a significant part of Soviet people for fulfillment of new tasks and aims. Only the last two aims: to overcome the advanced countries of the world by economic indicators and to build communism by 1980, remained unrealized. Such a disappointing failure caused a deep mental crisis among the Soviet people, reconsideration of all moral values; unbelief in new aims, plans and appeals; it was conductive to revelation of negative phenomena in Soviet economy and society, that were not noticed or were dissembled previously.

This mental crisis was aggravated by such phenomena as government crisis in the USSR in 1964 and the occupation of Czechoslovakia in 1968 that were painfully taken by the Soviet people and thereby promoted the origin and development of mental crisis. But the main reason of mental crisis of 1970s was the continuing economic stagnation, sharp decrease of pace of economic growth.

During the recent 25 years, the Soviet Union hasnt overtaken the USA by the main economic indicators, including the living standard; moreover, it hasnt even reduced the gap between them noticeably. It can be seen from the following examples. An American worker of medium skill has the wages of more than 2000 dollars or about 1500 roubles a month, while a Soviet worker of the same qualification has about 200 roubles a month. If we consider the social consumption funds in the USSR (low residential rental, free medical care and education, etc.), then an average remuneration of a Soviet worker will rise up to 270 roubles a month. And if we consider the unemployment in the USA, high price of service, etc., then it turns out, and many Soviet and American economists admit it, that the real living standard of a Soviet worker is 3 times lower than that of an average American worker.

If we compare the housing conditions of average Americans and Soviet people, we will see nearly the same picture. An American has about 40 square meters of dwelling place, while a Soviet only 14 square meters. In other words, two Americans have, in average, three rooms, while two Soviet people one room.

But the most striking is the difference between the levels of agriculture of the USA and the USSR. In the USA, only 3% of population is occupied in agriculture; in the USSR, according to different estimations from 13 to 20%. Nevertheless, about 300 million tons of grain annually is being produced in the USA, and only about 200 in the USSR. The production and consumption of other foodstuff in the USA is also bigger than that in the USSR: meat and meat products (3 to 4 times as much), milk, butter and other dairy products.

All these and many other facts dismay the Soviet people, causing pessimism, disappointment, unbelief in their own forces, in future. The enthusiasm and deep confidence in the future, that was peculiar to 1930s, 1940s and 1950s, gave place to absence of any faith in 1970s. And since, at that very time, a number of negative phenomena of economic and non-economic nature, that were weak or disguised before, came to light, all these factors generated the deep dissatisfaction of Soviet people with their lives. And this discontent showed up partly in the form of mass alcoholism that was the reaction of population for the loss of ideals, for crash of illusions, in captivity of which they lived for decades.

It should be noted that, though alcoholism became widespread among all the social layers of Soviet society, it is expanded most of all among workers. Alcoholism is popular not among adult population only, but also among teenagers; not only among men, but also among women.

The Soviet society spends tremendous money on the struggle with alcoholism and its consequences, but the results are modest. And it is clear. To heal the society from a social disease is only possible by means of combination of repressive measures with measures of social nature. One of these measures is the radical decentralization of the whole social production that, being combined with other economic and non-economic reforms, will breath new life into the development of Soviet economy and thereby return the Soviet people the confidence in future, in new aims, new ideals.

As we have said above, in 1970s, the Soviet society was also seized by another vice corruption. But if alcoholism is most spread among the lower social layer the workers of state enterprises, then the corruption is most popular among the higher social layer of Soviet society managerial personnel of state enterprises and establishments (bureaucracy), though, without a doubt, both these negative phenomena became popular in 1970s among other social layers of Soviet society as well.

At the same time, such negative phenomena as hooliganism and criminality became stronger, also among teenagers that, for the most part, is connected with alcoholism. Such uncharacteristic of the Soviet society negative phenomena as narcomania and prostitution became popular. Criminality became widespread, so that the whole country turned out to be covered by the network of camps and prisons. According to foreign data (the author has no access to Soviet information on this issue), there are about 3 million prisoners in the USSR today. Lets compare: the number of prisoners in the USA is not more than 600 thousand.

Among the negative phenomena in the Soviet society, one can point out to the following: those who used to be in Moscow, notice that, since 1970s, Moscow is, figuratively speaking, exposed to occupation from the direction of Soviet people living far from Moscow and, especially, near it, in neighbouring districts; from both urban and rural dwellers. In average, about 1.5 million people a day come to Moscow and, respectively, leave it.

The only goal of the majority of these people is to buy necessary commodities in Moscow: food-stuff, clothes, foot-wear, furniture, carpets, consumer technics, etc., etc. And the Soviet people coming to Moscow with another aim: to business trip, to excursion or on leave with transit through Moscow, also pack their suitcases, bags and rucksacks with food-stuffs and other things bought in Moscow.

This phenomenon is explained by the fact that the amount of various commodities per capita being sold in Moscow is several times more than that in other places of the USSR. And if we compare the amount of some kinds of commodities, for example, butter, meat, sausage, etc. being sold in Moscow and some other cities near Moscow: Kalinin, Kostroma, Vologda, etc., then it would turn out that the sale of these food-stuffs in Moscow is tens and hundreds times more (per capita). As a result, lots of citizens of these and many other cities, towns and villages day by day besiege Moscows shops in search of various commodities.

The Soviet people that come to Moscow to buy foodstuffs and other commodities glut all the railway stations, hotels, food and manufactured goods shops, civil transport of Moscow. A considerable part of Muscovites is occupied in servicing these people. Such a nonsense: almost all commodities bought in Moscow by non-Muscovites, are being produced in those very places, from which their buyers arrive.

First, various consumer goods are being taken from periphery to Moscow day by day with the help of hundreds of freight trains and thousands of trucks. Then, by means of hundreds of passenger trains and thousands of buses, buyers come to Moscow from the same periphery. Having bought the necessary goods, they return home by these very trains and buses. These hundreds of thousands (1.5 million people a day) of buyers are being served by many thousands of labourers of transport (trains, buses, trolley-buses, trams, underground, taxi), trade, catering, hotels and other enterprises and institutions. It is interesting that some part of this service personnel are non-Muscovites: together with 8.5 million of permanently registered Muscovites, there are 2.5 non-Muscovites with temporary registration in Moscow; they live from hand to mouth.

It is very difficult to eliminate this artificially created problem by means of more or less even, equalizing distribution of material and spiritual values among districts and cities of the country. In such a case, Moscow would feel the deficiency of thousands of various goods, like all other Soviet cities (or the majority of them) do; this would undermine the prestige and authority of Soviet society in the eyes of the whole world. At least, this is the opinion of many Soviet leaders. This problem, this negative phenomenon is difficult (almost impossible) to resolve in a short space of time under conditions of excessively centralized social production. But it could be resolved easily and quickly under conditions of decentralized production, in process of accomplishment of economic reforms, including the reform of price formation.

The acute housing problem is one more negative phenomenon of the Soviet society. We have already stressed, in what miserable, poor housing conditions many Soviet labourers live: in average, two Soviet people have one room. It is interesting, even paradoxical, that the state found the money for expansion of production of alcohol drinks in 1970s and at the beginning of 1980s, but there is always no money for the sharp expansion of dwelling construction. As a result, at all the enterprises and institutions of the country, the queue of labourers in need of dwelling are being maintained for many decades; these lists embrace up to more than 10% of collectives. To get a comfortable flat in turn according to above lists at the majority of enterprises and institutions, people have to wait 5 to 10 years for co-operative flat, and 10 to 15 years for state flat.

When the Soviet people complain of bad, miserable, sometimes awful housing conditions, they are being consoled by the fact that flats in the USSR are cheap, almost free of charge and supported by the state. But where does the state take the money to build and support dwelling from? Its easy to see that the state forms these and other funds by means of underpaying the remuneration to all the Soviet labourers. If, one day, the Soviet state increase residential rental, say, by 50 or even 100 roubles a month, but, at the same time, increase the remuneration, pension and other benefits for all the Soviet labourers (as it was the case in Hungary), then the latter would have missed nothing at that. On the contrary, they would win a lot.

First, the demand for dwelling would drop, so that people would have to wait for their flats not for 10, but, maybe, for 2 or 3 years only. Second, those Soviet people having the surpluses of living space today, but not aspiring to get rid of them owing to their cheapness, would be in a hurry to exchange their big flats for smaller ones. And, third, the state would get a lot of money from housing and communal services, like from other self-supporting enterprises, some part of which could be used for building new dwelling houses, that would enable to increase the scale of housing construction sharply. And this, in its turn, would help to resolve the acute housing problem and provide all the Soviet people with comfortable flats.

But why doesnt the government resolve this great problem by means of such simple methods? It is considered that cheap dwelling is pride and great achievement of Soviet society, people and state. But is it so? Can we be proud of such poor and miserable housing conditions, in which a significant part of Soviet labourers lives?

We have already said that, according to the doctrine of Marx and Lenin, all the problems of socialist society are to be resolved, first of all, based on the idea of economic expediency, and only then based on the idea of justice. In the case in question, i.e. at resolving the housing problem, the idea of economic expediency tells (or, rather, cries) us explicitly, that the quickest way of resolving the housing problem is to increase both residential rental and the remuneration of Soviet labourers. The experience of Hungary proves this.

It should be noted that this method of resolving the housing problem does not contradict the idea of justice. Lets consider three Soviet families. The first of them lives in good housing conditions, say, four members of this family have four rooms. The second family lives in medium conditions: four members have a two-room flat. And the third family of the same size lives in bad conditions: in small uncomfortable room, at that paying, say, 40 roubles a month to the master of the flat. The residential rental of the first two families is of nominal nature; it is too small to be taken into account. These costs are paid by the state. It is just, but only at first sight. After all, the third family in our example, unlike the first two families, vegetates in miserable housing conditions, but this very family pays the largest residential rental. Is it fairly? If it is, this is a very strange justice.

We say that the state bears house expenses for the first two families. But it bears these costs via the mechanism of state taxes and state budget at the expense of all the Soviet labourers: the latter are being underpaid some part of remuneration. In other words, these house expenses are being born by all the Soviet labourers. Therefore, the comfortable flats of the first two families are being maintained at the expense of all the three, but not the first two families living in them. The third family, that does not have a comfortable flat, takes part in maintaining the first two flats. We can say that the second family, living in two-room flat, i.e. in medium housing conditions, bears the expenses for maintaining its flat itself (via the system of state taxes and budget). The first family living in four-room flat bears nearly the same expenses, through the same mechanism of state budget, for maintaining its flat. But the support of this flat is more expensive for state and society, because it is twice as large. So who bears the second half of expenses for maintaining this four-room flat?

Its easy to see that this second half of expenses is being born, through the mechanism of state taxes and budget, by the third family from our example; this family does not have a comfortable state flat (and it is not known when it get it) and it vegetates in private non-comfortable flat, paying 40 roubles a month for this. So, this third family, living in the most miserable housing conditions, bears the biggest expenses for maintaining the housing.

The first family pays a half of its housing expenses (through the mechanism of state budget); say, it is 40 roubles a month out of 80. The second family bears its own expenses at the rate of about 40 roubles a month through the same mechanism. And the third family bears the second half of expenses for the first family at the rate of 40 roubles a month and, besides, pays 40 roubles a month to the master of the flat for the room it lives in. So, its expenses are 80 roubles a month, i.e. they are equal to expenses of the two first families taken together.

One may ask: where is justice here? How can we speak of justice, if those Soviet labourers living in the worst housing conditions, bear the biggest expenses for maintaining this dwelling?

From the standpoints of both economic expediency and human justice, it is earnestly necessary to resolve the acute housing problem in the country in the shortest possible time by means of simultaneous increase of residential rent and remuneration of labourers, as well as sharp increase of appropriations for housing construction with increasing its quality.

8. Necessity of reforms in Soviet economy and society.


The necessity of decentralization of social production and other reforms in the USSR is conditioned, first, by the fact that the Soviet economy, including agriculture, is in the state of stagnation. Second, the centralized production has discredited itself completely; it has no prospects for future, no hope for its significant improvement and growth. Third, in 1920s, decentralization of production in the USSR (not only small agricultural production, but also large: industrial, construction, etc.) had brought brilliant results, helped our country out of the economic dead end of the policy of equalizing centralized socialism (military communism) of the period since 1917 to 1921. And, fourth, the experience of Yugoslavia, China and, especially, Hungary testifies that the decentralization of social production is the demand of the times; this is the only way that will lead our economy, our country, being again in the economic dead end, to the rapid economic development and growth.

The main (though not the only) obstacle to the transition to new economic policy (new NEP), the core of which being the decentralization of social production, including planning and control, price formation and remuneration of labour, sale of products and supply of enterprises with raw materials, energy, technics, etc., is the fear of revival of unemployment in the country; this fear simply paralyzes some people, including some higher leaders of the state.

This is a very important question and in no circumstances can we disregard it. This is a question of prime importance; it would be a great mistake to postpone the discussion and resolution of it for future times, when the decentralization of social production has already fulfilled and the multi-million army of the unemployed has appeared. The matter gets complicated by the fact, that there is a great number of unemployed in Yugoslavia, where the decentralization of production had been done most consecutively. If the number of unemployed in Yugoslavia is 1.2 million people, then the question arises: is it possible, that the number of unemployed in the USSR, the population of which is 13 to 14 times more than that of Yugoslavia, would be in the range of 15 to 18 million people? Can we avoid this anyhow? We think it is possible.

The unemployment appears mainly as a result of rapid introduction of new, more effective, more powerful, more productive technics and new technology, i.e. in the course of machinization and automation of production. The reduction of labour power in one or another sphere of social production in the course of its saturation by new technics and technology can be clearly seen at the example of Soviet agriculture; we can hardly add something here. However, in spite of sharp reduction of labour power in agriculture of the USSR, there is no unemployment in our country. So, we can draw a conclusion that, in process of reduction of number of labourers in all the spheres of social production, including and first of all in agriculture and industry, that will inevitably take place during the decentralization of social production as a result of rapid introduction of new technics, including computer machinery, and new technology, organization of labour process, etc., etc.; we can draw a conclusion, that all the labourers being released from one or another branch could be directed to other fields, including the non-productive sphere: education, health protection, preservation of the environment and protection of public order, accomplishment of cities, towns and villages, to the sphere of culture and art, and, finally, to science.

When considering the scientific and technological revolution in the Chapter Seventeen, we have already said that, in the course of it, the majority of population gradually shifts to the sphere of science, the same way as, by the completion of hunting-technical revolution, the major part of able-bodied population of ancient society had moved from gathering to hunting and fishing business; the same way as, by the end of agrarian-technical revolution, the majority of population had shifted from hunting and fishing business to agriculture and cattle-breeding; and, during the industrial-technical revolution, the major part of population had moved from agriculture to industry and construction. Thus, the sphere of science alone could absorb all the population being released in other spheres of labour.

Besides, our country needs a lot of labourers in other spheres of labour as well, including the construction of new enterprises and technical reconstruction of old ones, building the scientific and design institutes, construction of schools, other educational institutions and infant schools, building the public service and public catering establishments, as well as shops, construction of theatres and stadiums, etc. Its hard to imagine that there could be odd people in our country that would have nothing to do.

But can there be that the self-supporting enterprises and institutions would release more and more people, while the enterprises and institutions functioning on the basis of subventions from the state budget would be short of funds to provide all these people with job? The science and construction could accept almost all the population, but where could we get so much money, the more so as money is needed not only for remuneration of labour, but also for procurement of technics, equipment, materials, energy, etc. There can be only one answer. All the funds, necessary for maintaining the non-self-supporting enterprises and institutions, must be taken, as it is the case today, from the state budget that is being constantly replenished by self-supporting enterprises and institutions through the system of state taxes. The more people is occupied in the sphere of non-self-supporting enterprises and institutions, subsidized by the state, and, accordingly, the less people is occupied at self-supporting enterprises and institutions, the bigger the state budget should be. This would enable to provide all the Soviet people with job and to debar the unemployment.

It should be noted that there are many party documents (including the program of the CPSU) concerning the automation of the whole social production in the future. One may ask: what will be the occupation of people in the future, when the production is automated? The same documents give the unambiguous answer: people will be occupied in non-productive sphere, including and first of all in the sphere of science. So why cant we fulfill in the near future, during the decentralization of social production, the measures that are planned for more distant future? Maybe we want to shift the burden of resolution of this problem to the future generations? But this is both economically inexpedient and unacceptable from the ethic point of view.

Of course, these and other problems will arise in process of decentralization of social production. But all of them are quite solvable and will be resolved gradually in the course of reforming the Soviet economy and society.

The question arises: in what way should we accomplish the reforms? Should they be carried out stepwise by branches, territories and single reforms, or simultaneously in all the branches of social production and non-productive sphere, concurrently by all the directions: in the fields of planning, price formation, remuneration of labour, sale, supply, control and taxation? It would be better to carry out all the reforms simultaneously in all the branches of social production and on the whole territory of the country, but they could be done stepwise as well. For example, we could first accomplish the decentralization of agricultural production, then industry, then other branches of social production: construction, service, communication, and, after that, the spheres of science, information (publishing), health protection, etc.

However, the stepwise reformation of society could drag on for many years, that would lead to large unjustified losses, which would be added to those multi-billion losses suffered by Soviet society owing to the retention excessive state centralization of social production for decades up to present time.

As to the reforms themselves, all of them should be accomplished simultaneously. If we first perform the decentralization of sale and supply, retaining the centralized planning, control, price formation and remuneration of labour, then the result would be negligible and imperceptible. And if we, together with decentralization of sale and supply, carry out also decentralization of planning, control and labour remuneration, but leave the centralized price formation untouched, then we would not reach the desired result.

If, in the course of decentralization of social production, we leave at least one element of economic policy: either planning, control, price formation, labour remuneration, sale, or, finally, supply under the jurisdiction of the state, then we would not get effective, striking result.

In order to have substantial economic result of decentralization of social production, it is necessary to perform the simultaneous decentralization of all the elements of economic policy: planning and control, price formation and remuneration of labour, sale and supply. Besides, it is absolutely necessary to carry out concurrently (or earlier) the reform of taxation system, since the decentralization of social production would not bring the desired result and effect without the reform of taxation.

Those miserable attempts to decentralize the Soviet economy, undertaken in 1953 to 1956 and in 1964 to 1968, were unsuccessful, because they were inconsistent and limited by nature. Suffice it to compare them with NEP in 1920s or with reforms in Hungary, China and Yugoslavia.

One more evidence is the example of Soviet agriculture having, in fact, three types of enterprises: state farms (sovkhozes), economically independent collective farms (kolkhozes) and kolkhozes being dependent on the state (on ministries of agriculture, district departments of agriculture, region party committees and executive committees, etc.). The most effective of these farms are independent kolkhozes resolving all their economic problems by themselves. They are, as a rule, prosperous kolkhozes, the leaders of which show everyday energetic initiative in process of resolving various, constantly appearing problems of economic life.

The second place by efficiency is taken by sovkhozes, the managers of which show almost none of personal initiative when resolving the economic problems, because all the decisions are being taken by higher managers, while they have only to carry out all the orders, instructions, etc. Their task is to fulfill the plan and all the orders from above. The issues of planning, price formation, sale, supply, etc. are being resolved by the others.

The last place is taken by dependent kolkhozes, the leaders of which, in view of subjective factor, are virtually in full or partial subordination to the higher leaders of region, district, republic or ministry. The leaders of these kolkhozes, trying sometimes to show the personal initiative in resolution of various problems of economic policy, permanently or periodically strike against counteraction, limitations or even strict prohibition from the direction of higher authorities, that give them orders conflicting with their wishes, opinions and interests. Having no opportunity or simply hesitating to oppose the higher authority and to defend their point of view or their, kolkhoz interests, the leaders of dependent kolkhozes direct them in accordance with guidelines of higher managers; the latter, being city-dwellers, are sometimes incompetent in the field of agriculture and their orders often cause damage to kolkhozes. The matter is aggravated by the fact that the leaders of these kolkhozes, hesitating to oppose these authorities in public, show their discontent in the following way: obeying in the open, they, in reality, contradict under various pretexts, sabotage disagreeable orders and instructions.

An independent kolkhoz has only one master: management board with chairman at the head. So is a sovkhoz: its master is the state and its representatives from the ministry to sovkhoz director. But a dependent kolkhoz has two masters: the state in the person of a higher manager and the management board. And where there are two masters, two powers, two leaderships, the interests of which sometimes interlace, collide, oppose to each other, one should not anticipate the order to be available. The farm should be directed either by the collective itself and its elected administration by means of democratic methods, or by the manager being invested by the state with power in its entirety, acting with the aid of authoritarian methods.

Since the long-term experience testifies that independent kolkhozes function better than dependent kolkhozes and sovkhozes, then, for all the self-supporting enterprises and institutions to work properly, they should be decentralized in the same way as the economically independent kolkhozes are, i.e. completely. Only in such a case could we get good results.

If sovkhozes, together with other state centralized enterprises and institutions, are given the status of dependent kolkhozes, when their economic independence is incomplete, middle-of-the-road, confined, then the economic situation in the country would only be aggravated. To avoid this, it is necessary to give both dependent kolkhozes, sovkhozes, and all the other self-supported state enterprises and institutions the status of economically independent kolkhozes, i.e. to delegate the functions of planning, control, price formation, remuneration of labour, sale and supply to the collectives of enterprises and institutions. After that, the state should not control these decentralized self-supporting enterprises and institutions, both co-operative and private, and state, but, in case of need, render them assistance of different kind: to inform them of sales opportunities on local, national and world commodity markets, of appearance of new kinds of technics and technology on the markets, to recommend the collectives of enterprises and institutions to make corrections of product range and volume of production, to give credits, etc., etc. It is clear, that the matter does not concern non-repayable money gratifications.

It should be noted that the decentralization of social production presumes not only sharp increase of economic independence of enterprises and institutions, as well as their associations. It also assumes the disaggregation of excessively large enterprises and institutions and, especially, their associations.

In the course of decentralization of social production, it would be expedient to disaggregate the large associations of enterprises in industry, construction, transport, trade, into a number of independent self-supporting enterprises. In countryside, the issue of disaggregation of large kolkhozes and sovkhozes, uniting up to ten and even more villages, would appear. Each of them should be divided into dozens of co-operative, family and private farms. One point is very important: disaggregation should only happen by the initiative from below, i.e. in collectives of sovkhozes and kolkhozes and their departments. No one from above should prevent this process, but, at the same time, no one should force the collectives of farms to disaggregate.

In some places, disaggregation could be economically expedient, while in other ones, vice versa, economically non-expedient. There may be places in which further agglomeration of farms would be economically expedient. In each particular case, this problem should be resolved individually and in a decentralized manner by the collectives being interested in it. Any intervention to this issue from above could only hurt the economy of these farms and the whole country.

Together with decentralization of social production (planning, control, price formation, labour remuneration, sale and supply, as well as other economic reforms: reform of taxation system, elimination of state monopoly of foreign trade, abolition of state subventions to self-supporting enterprises and institutions, overcoming the housing crisis, etc.), it is expedient to carry out other reforms and measures of socio-economic and political nature, that would harmonically supplement the economic reforms. The matter concerns the compulsory labour of prisoners, spongers, etc.; substitution of forced social insurance for voluntary and individual social insurance; replacement of compulsory universal military service by free-will military service on a contractual basis during 5 to 10 years; abolition of the death penalty with the substitution of it for deprivation of liberty for a term of from 15 years to life imprisonment; cancellation of procedure of passport registration and rendering the Soviet people the freedom of movement and dwelling, including departure abroad and return home; intensification of the struggle against criminality, including and first of all against corruption and other official crime.

All the aforesaid would promote the rise of authority and prestige of Soviet and, as a whole, socialist society and its social structure; the latter would become more attractive in the opinion of people of all countries of the world.

9. Socialist reforms and Party of co-operative socialism.


The Soviet society needs to be reformed completely from top to bottom, in all directions, in all fields. For this purpose, it is necessary to carry out the following in the socio-economic sphere:
  1. Transformation of the major part of bureaucratic enterprises and institutions to co-operative socialist ones with rendering them the complete independence of the state.
  2. Introduction of production self-administration at state enterprises. In the state sector, the implementation of decentralization of production: control, planning, price formation, labour remuneration, sale and supply.
  3. Organization of the sector of family and private farms, enterprises and shops. Cancellation of limitations of their activity, except the application of hired labour.
  4. Abolition of state monopoly of foreign trade. Granting the collectives of all the enterprises and institutions the right to trade and make contracts with foreign enterprises and institutions on their own.
  5. The reform of taxation system. Replacement of the existing taxes by the tax for production facilities (rental payment) and progressive income tax.
  6. Sharp decrease of the number of bureaucrats and bureaucratic institutions: ministries, state committees, offices, departments, etc.
  7. Transition from the strategy of subventions to unprofitable enterprises and institutions to crediting.
  8. Sharp reduction of social consumption funds with simultaneous increase of remuneration of labour and pensions.
  9. Disaggregation of large enterprises and their associations.
  10. Sharp expansion of dwelling construction. Accomplishment of cities, towns and villages.
  11. Sharp expansion of construction and repair of motor roads with hard pavement.
  12. Improvement of preservation and revival of the environment.
  13. Large-scale production of various small-size agricultural technics.
  14. Reduction of the number of work places with unhealthy conditions of work and rough labour by means of special taxation of them.
In the political sphere:
  1. Rendering all the citizens the real freedom of speech, of press, of assembly, of meetings and demonstrations, of conscience.
  2. Granting all the citizens the right to establish new organizations, unions, parties, including opposition ones. Rendering all the parties the right of unlimited activity, equalization of their rights with those of the CPSU.
  3. Giving the citizens the right of free exchange of information. Rendering them the right to create independent co-operative publishing houses and typographies, to issue independent papers and magazines, to use radio and television.
  4. Carrying out referendums at taking the decisions, resolutions and laws important for the whole country.
  5. Granting the citizens the freedom of movement. Abolition of political practice of passport registration. Cancellation of limitations at departure abroad and returning home.
  6. Bringing those official persons subjecting the citizens to illegal repressions and limiting their rights to the legal liability.


To implement the above reforms and measures, the adherents of market co-operative socialism would have to surmount the resistance and sabotage of reactionary and conservative part of bureaucracy. Therefore, the Soviet labourers should oppose their mass organization to the bureaucracy being organized and consolidated in the CPSU.

It is necessary to unite all the followers of market co-operative socialism with all the co-operators and left democratic organizations, having appeared recently and continuing to appear: political parties, popular movements and fronts, societies, clubs and unions; it is necessary to unite them all into the single Party of co-operative socialism, destined to protect its members, all the co-operators and all the labourers from the arbitrariness of bureaucracy and its bureaucratic state. The Party of co-operative socialism should strive for carrying out some of the above reforms and measures, as far as it is possible within the framework of state-bureaucratic socialism.

The Party of co-operative socialism should propagate its ideas among all the labourers and their organizations in order to win them over to its side.

The Party of co-operative socialism should strive for election of its representatives to all the elective authorities. The Party of co-operative socialism, its organizations and members should involve in its ranks all those labourers adhering to the position of market co-operative socialism, multi-party democracy and international co-operation, making it its aim, in addition, to unite all the European nations into a voluntary union of European countries and (as the final aim) to establish the world confederative union.

10. Conditions of transition to the higher, productive phase (communism).


In the course of natural-historical development of society, the lower, trade phase of socialist society will inevitably give way to the higher, productive phase, the same way as the trade phase of slave-holding - serf and capitalist societies had been replaced by productive phase.

At the higher phase of socialist society, the decentralized commodity production with market economy, money and trade exchange will disappear. The exchange of labour products will take place directly without turning them to commodities, as it was the case at the productive phase of primitive-communal society. However, it is only possible by means of overcoming the contradiction between the level of peoples needs and the level of labour productivity.

At the productive phase of primitive-communal society, the labour productivity agreed with the level of peoples needs. The former was sufficient to satisfy all the needs of people of communal-clan society. This correspondence between the labour productivity and the level of needs was the result of low level of needs of community members of clan society. All their needs were reduced to food, clothes, dwelling, decorations and some other material and spiritual benefits. To satisfy such a level of needs, high productivity of labour was not required. But the level of needs in modern society is so high that it could only be satisfied on the assumption of very high labour productivity. Only in such a case, all the peoples needs or, at least, the major part of them, could be satisfied.

Under socialism, the material and spiritual values are distributed according to the results of labour. There are two reasons for this. First, the contradiction between the needs of people and the labour productivity has not been resolved under socialism and, consequently, the distribution according to needs is impossible. Second, the labour of the majority of labourers under socialism is still not of mainly creative nature and, therefore, it is impossible and economically inexpedient to introduce the equalizing distribution.

The equalizing distribution under socialism would hamper the development of productive forces, reduce the rate of economic growth and the rate of growth of labour productivity.

And this is explained by the fact that labour of the major part of labourers is still not of creative nature and, therefore, is not their need. The labour of workers, peasants and employees, in its essence, is not need but economic necessity; consequently, it requires a combination of material and moral stimuli. At that, the material stimulus, economic interest of each labourer in the results of his work plays the main role.

In the socialist society, the rejection of material motivation and application of moral stimulus only, that leads to equalizing distribution of material and spiritual benefits, would cause the contradictions between the socio-productive relations and the nature of labour of the main part of labourers.

Only the change of nature and essence of labour by means of automation of social production, only the transformation of mainly non-creative labour (and it is such in modern socialist society for the majority of labourers) to predominantly creative labour would enable to transform the socialist principle of distribution of values according to the results of labour with the use of material stimulus to the communist principle of distribution according to needs. The change of nature of labour will inevitably lead to the change of socio-productive relations within the framework of one and the same socio-economic structure.

The second condition of this transformation of socialist socio-productive relations is the resolution of contradiction between the level of peoples needs and the level of labour productivity. Both these conditions: the change of nature of labour and the resolution of contradiction between the needs of people and the productivity of their labour, will be created more or less simultaneously by the completion of scientific and technological revolution. At the higher phase of communist society, after the disappearance of enslavement of man, subordination of him to division of labour; when the opposition of mental and physical labour is gone; when the labour stops to be the means of subsistence only but, in itself, becomes the first necessity of life; when, together with all-round development of individuals, the productive forces has grown as well and all the sources of social wealth flow like wide stream; only then people will overcome the narrow limits of bourgeois law and the society will be able to write at its banner: from everyone according to his abilities, to everyone according to his needs! (K.Marx, F.Engels. Selected works, M., 1979, vol.3, p.16).

In process of transition to the higher phase of socialist society, the integration of different forms of ownership of the main means of production will take place and the unified nation-wide ownership will be established. At the same time, the subdivision of society into classes and different social layers will disappear.
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