ronimois - soviet experiment with communist economy 1918-20

8/12/2019 Ronimois - Soviet Experiment With Communist Economy 1918-20

http://slidepdf.com/reader/full/ronimois-soviet-experiment-with-communist-economy-1918-20 1/17

Canadian Slavonic Papers

Soviet Experiment with Communist Economy, 1918-20Author(s): H. E. RONIMOISReviewed work(s):Source: Canadian Slavonic Papers / Revue Canadienne des Slavistes, Vol. 2 (1957), pp. 70-85Published by: Canadian Association of SlavistsStable URL: http://www.jstor.org/stable/40866020 .

Accessed: 28/10/2012 19:01

Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .http://www.jstor.org/page/info/about/policies/terms.jsp

.JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of

content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms

of scholarship. For more information about JSTOR, please contact [email protected].

.

Canadian Association of Slavists and Canadian Slavonic Papers are collaborating with JSTOR to digitize,

preserve and extend access to Canadian Slavonic Papers / Revue Canadienne des Slavistes.

http://www.jstor.org

http://www.jstor.org/action/showPublisher?publisherCode=canassocslav

http://www.jstor.org/stable/40866020?origin=JSTOR-pdf

http://www.jstor.org/page/info/about/policies/terms.jsp

http://www.jstor.org/page/info/about/policies/terms.jsp

http://www.jstor.org/stable/40866020?origin=JSTOR-pdf

http://www.jstor.org/action/showPublisher?publisherCode=canassocslav



Soviet xperiment ithCommunistconomy,1918-20

H. E. RONIMOIS

Thirty-nineyears ago RussianCommuniststagedan armeduprisingwith a view to establishinga Communistsociety. Their economicexperimentoincided with a period of chaos and hostilitiesn Russiaand bears, therefore,he name War-Communism. 1 his experimentwas aimed (in political terms) at the transformationf a capitalist

Blueprint of a Communist Economy

FIRMS(I)

II>-/LL/ ^___

(2)

I >*^^

L Land IssuesA Capitalgoods (1) Apportioningf andM Manpower (2) ApportioningfmanpowerO Output fcapitalgoods (3) ApportioningfcapitalgoodsO* Output fconsumeroods (4) ApportioningfconsumeroodsΕ Income s a share foutput (5) Incomesn andF Surplus

*See A.Baykov,

heDevelopment f

theSovietEconomicSystem, ambridge,1946,pp. 1-48; I. Gladkov,Ocherki troitelstvaovetskogo lanovogokhozaystva

ν 1917-1918g., Moscow,1950,p. 361; and Organizatsiyaovetskogo oennogokhozaystva 1918-1920, n Iz. Ak.Nauk,1946, V, pp. 320ff.

70



SOVIET EXPERIMENT WITH COMMUNIST ECONOMY 71

economy ntoa communist conomy, r (in economicterms) of anexchangeeconomy ntoan economybased on the physicalallocationofresources.n the communist conomy,moneyand other ategoriesofexchange uch as prices, osts,profits,upply,demand,and so forth,are necessarily bsent and resources such as land (L), capital goods(A), manpower (M) and outputsof producer goods (O«) and con-sumergoods (Oß) have to be apportioned n physicalunitsbetweenindividualconsumersE) and individualfirmsF, as well as A, L andM). Our diagrampresents bird's-eye iew of a communist conomy,

in whichthefirms II and IV produce producer goods, and the firmsI and II consumer oods.This was thefirstfan entire eriesofSovieteconomicexperiments

and the onlyone which reflected he directinfluence f Karl Marxand his ideas. Accordingto Marx, nationalizationof the means ofproductioneads to communist conomy n whichthemarket nd allits categorieswill wither way, and will be supplanted by what hecalled the relationshipsof a natural economy (that is, physicalallocation). The extent o which SovietWar-Communismwas basedon this dea of Karl Marxmaybe deduced from he following tate-

ments f Larin andKritzman,hief rchitects f thisexperiment.Larin, who was then the Head of the Economic Departmentof

the All-RussianCentral Executive Committee, tated in a booklet,2publishedon theoccasionofthe first isitofthe British radeunioniststo theSoviet Union:

Once productionas been socialized nd the socialorganizationas beenestablished,heremust akeplacea gradual ransitionothenaturalconomy( Naturalwirtschaft ).. . Individual irms ecome meredepartmentsrshopsof a singleenterprise,ithinwhich there s no room forthe free

interplayfblindeconomic orces f the formerourgeois ociety r forcommercialelationshipsetweenhem.The needfor heexchange fgoods, nd thepurchase f rawmaterials

andmechanicalquipment,s also the needfor redit nd banking pera-tions isappears.n their lacea well-regulatedeliveryfarticles romnestatefirm o another rises.The ledgerswill showhow much coal andother roducehavebeendelivered,n theorder fthechiefdistributingagency, rom ome Main Administrationo the railways. hat is all. Nootheromputations,nd noremunerationrenecessary.

As theresult f all these, ndvarious thermeasures,hesignificancefmoneyhas been decliningmoreand more, nd vice versathat of direct

2Yu. Larin and L. Kritzman, cherkkhozaystvennoyhizni i organizatsiyanarodnogokhozaystvaiovetskoy ossii,Moscow,1920, and its GermaneditionpublishednHamburg, 921,under hetitleWirtschaftslebenndWirtschaftlicherAufbaunSoviet-Russhnd,917-1920.



72 CANADIAN SLAVONIC PAPERS

provisionf food and other onsumer oodshas been increasing. ue tothis new economic rganization, orkers re losingall interestn moneywages.The functionfmoneys dying ut n Russia, s has alreadybeenthefate f hebanks,heExchange,ndso forth.. .

Like money nd moneywages,the taxation ystemwill also graduallydie 8

These views of Larin and Kritzmanreflected ot onlyMarx'sideasconcerninghe communist conomy n general,but were in agreementwith similardoctrinaire pinionsof the leading communists f thisperiod.4For example, talinhad expressed imilar iews as earlyas the

year 1906. With the abolition of exploitation, ommodity roductionand buying and sellingwill also be abolished and, therefore,herewill be no room forbuyersand sellersof labour power. . . . For thepurposeof administratingublic affairs herewill have to be in theSocialist Society ... a Central StatisticalBureau which will collectinformationbout the needs ofthewholeofsociety, nd thendistributethe variouskinds of workamong the workingpeople accordingly. 5

These few quotationsare sufficiento reveal the doctrinaire atureof the Sovietpolicies of War-Communismnd to refute he claim ofsomelaterobservers hatSoviet authoritieswere

forcedo followthese

policies because of dire necessity n the post-revolutionary eriod.Russianauthoritieswere no doubthamperedby shortages fmaterialsand the deterioration f theircurrency. till, a similarpredicamenthas been overcomein other countriesby means of restoredmarketrelationships nd, consequently,the Soviet choice of the Marxianprogramme an not be attributedo it alone.This choice reflects athertheunlimited eliefof Russian Communists n Marxand his ideas and,therefore, eserves closer attentionas the first ttemptto rely onMarx'sadviceinpracticalmatters f economic dministration.

The transition romexchange to physical allocation of economicresources mplies- mong othermeasures-fivebasic changes,whichSoviet leaders of this early period apparentlyperceived,and whichthey ndeed attempted o bringabout. A perusal of thevariouslaws,decrees and instructions f those years, published in the SobranieUzakoneniy nd the Izvestiyaof the Soviet government,eveals thattheSoviet egislators ried o introduce pportioning rrangementsnto

zibid.,pp. 69, 73, 74, 188 (German dition).4Compare enin'sand D. Rjazanov'sviewson wages and Trotsky'srguments

infavour fcompulsoryabour n S. N. Prokopovich,arodnoekhozaystvoSSR,

New York, 952, I, pp. 80-1 and 87-8. However,A. Rykov p. 81), M. Tomski(p. 93), W. Schmidt p. 93) and some othersdeclaredtheiropposition ovarious oints fthisprogramme.

5J. talin,AnarchismrSocialism?,Moscow, 951,pp. 57,60.




thefieldsof (1) land, (2) manpower, 3) producergoods, (4) con-sumer goods, and (5) private income; that they encounteredthegreatest ifficultiesnarrangements3 and (5 andthat heentire ro-grammewas eventually bandoned beforethe transition rommoney-wages to incomes-in-kindould be accomplishedand, hence, beforemoney ould be entirelyliminated rom heSovietallocation mechan-ism. In this paper, Soviet legislationof War-Communismwill bearranged ccording o these ndividualchangesrather han n chrono-logical order,which s ofsecondary mportance rom hepointofview

oftheanalysis fthis xperiment.

Changes1 and 2

The apportioningof land and mineral resources implies publicownership fthese resources. he shift rom hesale-purchase ftheseresources to their apportioning n physical units6was attained inSoviet Russia by land nationalization s early as 1917,7and in twoconsecutivestages. The first tage establisheda decentralized and-

rationing ylocal authorities-hevolosts nd the uezds8- to all citizens

and according o certain stablished tandardrations.9 his apportion-ing arrangement- hich was bound to result in a great number ofsmall farms-was contraryo Lenin's ideal of a large-scaleagricultureand was endorsedbyhimmerely o win thepeasants' supportfor hisgovernment.10he second stage introducedLenin's ideal of a central-ized apportioning f and from n all-Russian land-fund 11o the stateand the collectivefarms nd was intended to completethe transitionto a communistystemn agriculture.. to an economybased uponthe communist rinciplesnthespheresofproduction nd distribution

(par. 29 and 60 of this decree). This second apportioning rrange-eThisshiftwas foreshadowedy par. 1 of the Krestyanskyakaz ο Zemle,

published n August,1917, in IzvestiyaVserossiyskogooveta KrestyanskikhDeputatov.

7ThedecreeofOctober 6, 1917 (SU, 1917, 1, 3 par. 1 and 2, and Izvestiya,October 8,1917). Thisdecree xcludedandsownedbypeasants rom ationaliza-tion.Urban andswerenationalized nAugust 0, 1918 ( SU, 1918, 62, 674 andforestedreasonMay14,1918 (SU, 1918,42, 522).

8SU, 1917,1, 3, par.2 and Lenin's nstructionfNovember 8, 1917, n SU,1917,2, 23.

»Thedecree fFebruary 9,1918 (SU, 1918,25, 346,par. 12). Par. 17 ofthisdecree ocialized he monopolisticand-rent.

10 Thepoint s that hepeasantryhouldfeelconfidenthatthere re no moresquires n the country'Lenin,CollectedWorL·, XXII, d. 23 ÍRuss. edition).11A11ands of theRSFSR weredeclared as constituting governmentund

onFebruary 4,1919 (SU, 1919,4, 43). Compare lso SU, 39/40,384.




ment-which has remained in force until today12- rohibited13 helocal authorities romgranting ny more land to individualpeasantsand led to a wholesale evictionof individualpeasantsfrom he landsapportioned othembythe ocal authoritiesnly yearbefore.14

The centralized pportioning f labour-servicesmpliesvirtualcon-scriptionof labour. This condition of physical allocationof labour-serviceswas establishedby thefollowing ecrees.On October5, 1918,personsnot already employed n some sociallyuseful activitywereissued labour books completewith detailed workassignments. hese

bookswereused to record,once a week,the attendanceof thepersonconcernedat his work and, once a month,the attainment r non-attainment f his assignment. oon afterwards, onscriptionwas ex-tended to various groups of technicalspecialists.On December 10,1918, the Russian labour code introduced general conscriptionoflabour15forall Russian citizens with the exceptionof juveniles,oldpeople and invalids. This decree left the labour-book workers ustmentioned t the disposal of the local Soviets and advised theirem-ploymentn the fields of defenceestablishments,oading of freight,fuelproduction,tc. On January 9,1919,a special decreewas passed,establishing onscription f specialists employed in agriculture, ailand watertransport,nd governmentgencies.A moredetailedappor-tioningarrangementwas introducedby the decree of January29,1920. 6Thisdecree setup twooverlapping ypesofcompulsoryabour:one (basic) related to one's own job, and the other (auxiliary) topublic works of whatevernature. It also introducedvarious pro-

cedures forreapportioningredistribution) f labour resourcesof theentire country, ncludingmass dispatchingof conscriptedworkersto other ocations.Punishment or loiteringwas introducedby the

decree of April27, 1920. Those guiltyofabsence fromwork

had topay fines nd to work overtime rwere sent to concentrationamps(this termwas, in fact,used by the legislators).Absence fromworkfor three consecutivedays was declared an act of sabotage and wasdealt with ccordingly.17

These twochangeswere,of course,fraughtwithsocial and politicalimplicationsof far-reaching onsequences. Their attainment tself,however,was a comparatively asymatter,which nvolvedthepassing

12Forthe present dministrationf the Soviet land-fund ee chap, ν ofZemelnoe ravo Land Legislation),Moscow, 949.

13SU,1919,4, 43,oar.9. ^ZemelnoePravo.Moscow.1949,d. 66.15Sovetskoe rudovoePravo (Soviet Labour Law), Moscow, 1949, pp. 88-9.Compare lso Izvestiya, uly 5, 1918.A decree,publishedn SU, 1918, 64, 704,had prohibitedhe unemployedrom efusing orkofferedo them.

mbid., . 89. nibid., . 91.




of some few decrees only, and required a relatively imple set ofadministrativegencies. The apportioningof the 'land-fund wasentrusted hieflywiththe Ministry People's Commissariat)of Agri-culture18 nd has remained withthisagencyever since.19The appor-tioningof labour-forcewas entrusted o the Ministry f Labour, theRussiantradeunions,20nd tosomeextent he ocal Soviets.

Changes3 and 4

The centralized pportioning fproducergoods and consumergoodsalso impliespublic ownership ftheseresources, ut requiresa some-whatmorecomplex etofagencies.

These resourceswerenationalized rweredeclareda statemonopolypiecemeal, by a series of decrees.Large-scale industrynd its outputwas nationalizedon June28, 1918.21 mall industrial lantsoperatinga mechanical source of power and employingfiveor more workerswere declared stateproperty n November29, 1920.22All agriculturalmachinerywas also nationalized and trade in this machinerywasdeclareda statemonopoly.23he governmentssumedmonopoly ights

over trade in all kind of grain (on May 13, 1918 24 and in variousother consumergoods such as textiles (on December 16, 1917 ;25matches,candles, rice, coffee(on March 7, 1918 ;26 hides, leather,oil-seeds, nd so forth.On October 30, 1918,farmerswere subjectedto compulsorydeliveries of grain and animal produce.27 Dwellinghouses and other buildings located in urban centres were alsonationalized.28

These and various other legislativemeasures placed the Russian

«SU, 1918,72, p. 787.

19Compareemelnoe ravo, 949,pp. 144,145.^SovetskoeTrudovoe ravo,1949,p. 92.21Compare . A. Vlasov,Sovetskvpsudarstvennv:pparat,Moscow,1951.22SU,1920,93,512 and zvestiya, ecember , 1920.23SU,1917,5, 73, and Izvestiya,November 0, 1917; SU, 1918, 25, 346, par.

18,and zvestiva, ebruary 9,1918.24SU,1918,25, 346,par. 19. Foreign radewas nationalized n April23, 1918

(SU, 1918,33, 432).25SU. 1918. 54. 599. and zvestiva.Tulv 3. 1918.26SU,1918,29, 375,and zvestiva,March , 1918.27SU, 1918, 82, 864, and Izvestiya,November14, 1918. Comparealso the

instructionublished n SU, 1918, 91/92, 928. These deliverieswere computedfrom utput xceeding he establishedonsumption-ratiosorpeasantpopulation.

According o Larin (Wirtschaftslebennd Wirtschaftlicherufhau,p. 36), apeasantand the members f his familywere entitled nnually o 12 poods ofbread-grainach,which mounted o 750 grammes fgrainper day or approxi-mately 6 per cent,of what an average peasantconsumed eforeWorldWar I.

28SU,1918,62,674,and zvestiya, ugust 4, 1918.




governmentn chargeof both the industrial apacities and the stocksof producerand consumergoods,but failed to set up agencieswhichwould administer tilizationof these capacities and the apportioningof these stocks n the Russian economy.On this important spect ofcommunistconomy- he communist conomicorganization-Marx hadoffered o advice whatsoever; o the Sovietauthoritieswere leftwiththe taskof mprovisingheir wnsolutions. he institutionalrameworkwhichwas eventually etup to runtheproposed communist conomyassumed the following eatures.

Both the pooling and the apportioning f consumergoods betweenindividualtoilershad to be centralizedfor one particular easonchar-acteristic of industrialproduction: industrialworkersemployed in

heavy industryfirms II and IV of our diagram) could not share intheirown output O«) of,forexample, teelormachinery,nd, there-fore,had to share with the workers mployed n the consumergoodindustryfirms and II) in theoutputof the atter Oß). Distributionof consumergoods was centralized n one single agency,set up bydecrees ofNovember21, 1918 and October26, 1920,underthe nameof the Ministry People's Commissariat) of Provisions.29ection III

of the latter decree entrusted hisagencywith the authority o draftand to carryout distributionrogrammes orboth food and non-foodconsumergoods; and Section II instructed t to co-ordinate ts distri-butionprogrammeswiththe productionprogramme f industry. hisdecree also established the apportioning f the output of consumergoods between total home consumption, n the one hand, and theallocations to industry, xporting rganizations nd reservefunds,onthe other.

Distributionof producer goods was planned as an inter-depart-

mental affairwithina single industrial uper-ministry-he SupremeEconomic Council (VSNKh). When first stablished on December 5,1917, this agency was meant to plan, administer nd regulate all«economicife n SovietRussia.30But afterNovember30, 1918, t waslaid downthattheagencyshoulddeal with ndustrylone, and itwassubdivided into a numberof divisionsor Gfovks, ach of whichwas

2»SU,1920,86,429.30Accordingo Vlasov,Sovetsky osudarstvennyapparat,p. 248, the original

VSNKh consisted f the following inedepartments: griculturend Provisions;Transportation;rade; StateEconomy nd Banks;Workers'Control;Committee

of EconomicPolicy; Special Departmentsf Defence and Fuel; and EconomicDepartment f theAll-Russian entralExecutiveCommitteeVZIK). The last-mentioned epartmentheaded by Larin) was to regulate ll productionnddistributionndto administerll enterprisesftheRepublic SU, 1918, 58, 644,par. 2).




put in chargeof someparticular ranchof industry,uch as coal(Glavugol),petroleumGlavneft), res (Glavruda),textilesGlav-tekstil),ndso forth. owever, nly pproximately,000nationalizedfirmsf thetotalnumber f37,000 ndustrialirmsin 1920) wereincorporatedntheseGlavks; herestwere dministratedythe ocalagencies ftheVSNKh, lthoughomeof these irms emained ndergeneralupervisionftheAll-Russian SNKh Izvestiya, ebruary0,1920). Nevertheless,t was undoubtedlyhe most mportantectionofRussian ndustry hichwas amalgamatedntotheGlavksof the

VSNKh.Eachof heseGlavks dministeredroductionn its irmsya systemfcentralizednd ong-distanceanagement.he individualfirm as reduced o theposition fa mere hopofa Glavkand thebottomink n thehierarchyf itsoffices.ach office rescribedotheoneimmediatelyelow t and ultimatelyo thefirmtself-egu-lating ll itsproductionecisions nd functions.n Soviet iterature,thisbureaucraticystemfmanagementearsthenameof the inearsystemf economicdministration.n this ystem,he hop-firmsereexcluded rom he elling rbuying perations,hichwere ventuallyreserved o two specific fficesn each Glavk: the Glavsbyt theoffice, hich pportionedutgoing eliveries fproducer oodsbe-tween therGlavks)andthe Glavsnab theoffice hich pportionedincomingeliveriesfproducer oods upplied y Glavsbytsf otherGlavksbetween ndividualhop-firmsf its ownGlavk). Individualshop-firmsealt with their Glavsbyt makingdeliveries) andGlavsnabreceivingeliveries) nly nd werenotpermittedo tradedirectly ith neanother. he decree fJuly 5, 1920, lsoprohibitedstatefirms rom urchasingheirmaterialsn the openmarket nddeclared hat henceforthll statedemand houldbe satisfiedy

state upply paragraph of thisdecree).All distributionfpro-ducergoodswas,therefore,obe effectedetween Glavsbytnd anumber fGlavsnabs.

There s little,f any,doubtthat thispattern31f distributionfproduceroodswas elaboratedoserve heMarxiandealof multiplebarternvisaged yLarinfor he Russian conomy.

If and whenmoneywasabolished,heGlavsbytsf theGlavks,ndtheMinistryfProvisions,eretoapportionheir tocks fproducer

31Cf. Glavkizm, n Large SovietEncyclopaedia, nd edition,XI, pp. 456f.;Politicheskayakonomiya, chebnik, cademy fSciences, SSR, Moscow,1955,

pp. 330ff.; v. Granovskii,konomikaotsiyalisticheskoyromyshlennosti,oscow,1940,pp. 32ff.; S. Studenkin,W. A. Vlasov, . I. Evtikheev,ovetskoe dminis-trativnoeravo,Moscow,1950,chap. 4, par. 5; Vlasov,Sovetsky osudarstvennyi apparat, p. 157ff.,tc. The VSNKhwas frequentlyeorganizednd was finallydissolved on January, 1932) intoa number f industrialministries.




and consumergoods respectivelybetween the Glavsnabs and theindividualworkers reeofany monetary ompensation. o long as thismaincondition f the communistconomywas notrealized,and moneyas well as prices prevailed, the Ministry f Provisionscontinuedtosell its stocksof consumergoods, and the Glavsbyt-Glavsnab rans-actionsassumedtheform f the bulk-sales nd thebulk-purchasesndcontinued o be recorded n monetary ermsby means of a system fbook-keeping ntriesreminiscent f a credit-clearing rrangement.32Eventually, hisarrangementwas expanded, and the sphereof cash-

transactionsurtailed.BetweenJanuary 919 and July1920,the scopeofpaymentsby book-entrieswas extendedfrom he Glavks to muni-cipal enterprises,rivatefirms ndergovernmentontrol, o-operativesocieties and their firms33nd, finally, o private industry.34 on-versely, he sphereof cash-paymentswas limitedfirst o payments fa Glavknotexceeding5,000roubles and to itspurchasesfromprivatefirmswhich werepermittedfa statefirm ad failedto complywiththe purchase order of the Glavk withinthreedays); and was thenrestrictedopurchasesof theAgriculturalrocurement genciesofthegovernmentrom he peasants,and certainexplicitly uthorizedpur-chases of the Glavks or co-operativefirms romprivate producers.35It should be kept nmindthat thisarrangementfa centralizedbook-keeping-whichbythewaywas effected ytheMinistryf Finance36-did not provide for the gain-or-loss ccountingin Soviet industry.Profitswere regardedas part and parcel of a freemarketeconomy( capitalism ), nd nationalizationwas believedto absolve the authori-ties fromprofitnd even cost considerationsltogether.

Change5

Side bysidewiththesepreparations orcommunistconomy, ovietauthorities lso launched a directassault on moneyso as to make it

32Thedecreesof August13, 1918, and January9, 1919, (SU, 1919, 2, 22,par. 1, and Izvestiya,January9, 1919). Statefirms ereordered o keep theirdepositsn thePeople'sBankafterMay2, 1918.

33DecreeofJanuary, 1920 (SU, 1920, 1/2,9; Izvestiya,January 0, 1920).34Thedecree fTuly 5,1920.»5Cf. hedecrees fJanuary9, 1919 (par. 2 and 3) and July 5, 1920par.2,

5 and6).8eFollowinghe mplicitdviceofKarlMarx,RussianCommunists1 national-

ized all banksonDecember 7, 1917 (SU, 1917,10, 150,and Izvestija,December

17, 1917) and then (2) abolished-earlyn 1920-the newly organizedPeople'sBankaltogethercf. A. Zverev,FinansySSSR za XXX let,1917-1947,Moscow,1947, pp. 12ff.).The Ministry f Finance was apparently lso consideredtemporary easure o be eventuallybolished, ncemoneyhad finallywitheredaway fromheSoviet conomy.




witherway. This assault was directed rimarilygainstmoney-wagesandconsisted f an attempto shiftver o ncomes-in-kindypiecemealextension f the sphereof theseincomes.Early Sovietplanners pparentlyntended o increase herangeof articles ndserviceswhichwere given o the workersnstead fbeingsold tothem, ntil ll consumeroodswouldbe given r apportionedndnone would be sold. Soviet sourcesdescribed hispolicyas thenaturalizationf wages. This programme as mentionedn the

Russian ress or hefirstimenSeptember918, ndon October 9,

1918, resolutionnsupportfthis rogrammeasmoved nd carriedbytheAll-Russianonferencef MetalWorkers.arin laims ohaveinitiatedhismovepersonally.37uringthesubsequentmonthsndyears hefollowingmeasureswere ntroduced,hesummaryimofwhichwas to eliminateashfromncome ransactionsltogether.

Kritzmanelatesus thatfirstwages-in-kind erepaid to agri-cultural orkers ho refusedowork npeat-bogs,n theforestsndonthe ugar-beetarms,nless heywerepaidinpeat, ogsandsugar-beets, espectively.38aterthis ystemf sharingntheir irms'ut-put was extendedo workersn the coal mines ndoil-fieldsnd to

artisansntowns ndvillages.Allthese hare-incomesE) werefixedaccordingotariffsetupbytheCentral ouncil ftheTradeUnions.This systemfpayments-in-kindas graduallyntroducedn otherbranchesf ndustryyindividualmeasures.

FromJanuary , 1919, onwardprivatemail not exceeding15grammesn weight and all officialmail) was deliveredfreeofcharge.39 fter eptember919,children f workersnd employeesnotexceeding 6 years fage werepromised ree ood.40omewhatlater, ll children f school-agewerepromised lothing,oot-wear,

stockingsnd socks,headwear nd textbooks.arinclaimsthatbyJanuary, 1920threemillion hildrenwerealso being given, partfromhe rations entionedbove,hotmealsfree fcharge.41boutthe ame ime, ree ood ations ereprovided or hefamiliesfRedArmy oldiers August20, 1918), medicalpersonnel January 1,1920),andhospitals,esthomes,ndsoforth.

The subsequentbolition fmoney-wagesfall industrial orkerswasforeshadowedya number f movespointingummarilyn thisgeneral irection. decreeonrents or partmentsroze ll rents tthe evelprevailingn July , 1919. n viewof theinflationaryall

87Larin nd Kritzman,Wirtschaftslebennd Wirtschaftlicherufbau,pp. 70f.88/fcfcL. 186.»»SU, 1918,83,880,and zvestiva,November 4, 1918.40SU, 1918,68,732; also SU, 1919,20,238.«Larin andKritzman, irtschaftslebenndWirtschaftlicherufbau, p. 70f




of the value of the rouble,rentsbecame mere tokenpaymentsandthe living space appeared to be apportioned n physicalunits. Laterworkerswere to be suppliedwithworking lothes,the choice of thepatternof the fabric and the cut being left to the trade union con-cerned. Larin states that the government llotted over 100 millionyards of textilesfor this purpose, but admits that distribution fclothingwas delayed until1920. Shoes,headwear, and soap were alsoapportioned othe workers.A decree, ssuedby the end of 1919,frozethepricesof all rationedarticlesat the level prevailing n July1919

and brought hesearticles lso within heorbitof thevirtually ppor-tionedarticles.Two decrees, ssuedearly n 1920,cancelledall chargesforwater, electricpower, gas, etc.,42 nd for all postal, telephone,telegraph, nd other services43 f organizations nd firms,nd fore-shadoweda similar hangealso as faras privateusers oftheseserviceswere concerned. In March and April of 1920, all workers werepromisedhotmealsat theirworking laces freeofcharge, nd bonusesin the formof sugar,salt, matches, extilematerials, nd so forth, obe apportioned n proportion o exercisingby the workersof theirproductivepowers'*.44 n April 19, 1920, a fund, consistingof 40

millionyardsoftextile abrics, 0 millionboxes ofmatches, nd otherconsumergoodswas setup forrailwayworkers s an incentive.

A decisive step towardswages-in-kindwas made by the decreeof the SovietgovernmentfApril30, 1920.45This decree establishedthreeuniformconsumption ationsforthe entireworkingpopulationof Russia: rationA for manual workers of state firms nd offices;rationΒ forwhite-collar mployees of state firms nd offices; ndrationC for persons employed in privatelyowned enterprises ndprivatehouseholds/Whereas herationsofgroupA exceeded those of

group Β by 33 per cent,the latterexceeded-in turn- he rations ofgroupC. This gradingof consumerswas expectedto secure a moreequitabledistributionffood articlesbetween theworking opulationoftowns, ndustrial entres nd agriculturalocalitiesdeficientn foodsupplies, nd so raisethe evel ofproductivitynd efficiencyflabour9(the preamble of thisdecree). The workerswere graded into thesethree ategoriesbythe All-RussianCentralSovietoftheTrade Unionsand the Ministries f Labour and Provisions, nd the tariff f theirfood-wageswas announced n Sobr. Uz., 1920,61/62,276. The appor-

42SU,1920,6 and Izvestiya, ebruary , 1920. This concessionwas limited o

thecitv f Moscow. 43SU. 1920. 20. 109. and zvestiua.March 7. 1920.44Larin nd Kritzman,Wirtschaftslehennd Wirtschaftlicherufbau,pp. 73f.45SU,1920, 34, 165, and Izvestiya,May 4, 1920. Previously,herehad been

thirty ifferentategoriesof consumers i.e., consumptionations). CompareBaykov, evelopmentfthe SovietEconomic ystem,. 26?




tíoning f these food-incomes ithout hargewas entrusted nDecember4, 1920,to the Ministryf Provisions, hichwas soonafterwardson December17) directed o distributelso non-foodconsumeroods,46ree fcharge, oworkersnd families fsoldiersthroughouthecountry,nd to theentire opulationn Moscow ndLeningrad.uel toowas notto be soldbutdeliveredo all workersand enterprisesreeof charge.47 he latterarrangementeferredspecificallyo firewood,oal,petroleum,eat,shaleand someotherkinds ffuel. t announced hatthelocal fuelyardswouldreceive

fuelfrom heGlavks oncerned ree fcharge par.3), andthat heywouldnot nly istributehis uel, ut also delivert totheconsumersfree fcharge par. 4). Theseapportioningrogrammesere to beimplementedrom anuary,1921. n June 920, womoremeasureswerepassedagainstmoneyn SovietRussia.Transportationhargesforworkersravellingo work, r to theresorts,nd forall state-owned ommodities,ere bolished n Russian ailwaysndshippinglines. And, finally, ll money-taxes,ncluding ncometax, wereabolished orRussianworkers.axesremainedn force nly s a dis-criminatoryeasure gainst he non-workingopulation. 48

Duringthe concludingmonths f 1920 Russian egislators eremaking eriouspreparationsoreliminating oney rom irculationaltogether.heywere ooking orwardo national ccounting ith-outmoneywith view ofabolishingheentiremonetaryystem ,49and a decree ftheSovietgovernment,assedonSeptember1,1920,invited inancialuthoritieso presentegislative roposalswiththisaim in mind.50Whereas, n December1917,incomes-in-kindadaccounted ornomore han6 percentof theaggregate ersonaln-come f heRussianworkers,ythebeginningf1921 hey onstituted

93.7percent.

On March 1, 1921,51enin, hemanwho hadpersonallyndorsedmostof thedecisions resentedbove,abruptlybandoned he at-

46SU, 1920,93, 505, and SU, 1920, 99, 531. On January 0, 1921, the pro-curement f foreignersesidingn Russia with consumer oods was regulatedbya specialdecree fthegovernmentSU, 1921,2, 18).

47Thedecree fDecember 3, 1920 (SU, 1920,100,539).48Larin nd Kritzman,Wirtschaftslebennd Wirtschaftlicherufbau,p. 73.

Accordingo A. Zverev in Finansy SSR za XXXlet,191^1947, Moscow,1947,p. 12) monetaryaxationwas abolished n February, 921.

4»Cf.Russia,the OfficialReportof the BritishTrade Union DelegationtoRussia,London, 924,p. 24.

ß°SU, 1920, 85, 422. Of all legislative cts of thisstrange eriod, hisdecreereflectshe dea ofMarxian ommunism ost learlv.51The New EconomicPolicywas officiallyntroduced y a Nakaz of the

RussiangovernmentfAugust 1, 1921.S. G. Strumiliii,roblemy lanirovaniaSSSR,Leningrad,932,p. 32.




tempt o establish communist conomy n Russia, and reintroducedvariantof controlledmarketeconomyunder the name of the NewEconomicPolicy.Somewhat ater,he condemned hisearlyexperimentin the followingwords: We have spent already fiveyears fussingaroundwithour stateapparatus and thisfussing round has proved,duringthesefiveyears,merely ts uselessnessor even itsharmfulness.It has created an appearance of work,while in actual fact it has

clogged up our institutionsnd our brains. 52The Marxian experimentwiththe Russian economyhad proved a

dismal failure. The output of the Russian large-scale industrywasseven times ess thanbefore hewar,reaching n 1920a bare 1.7 billionroublescomparedwith 10.2 billion in 1913 (all in 1926/27prices).53The outputof agriculturehad been cut in half.54 ndustrialemploy-ment had dwindled from 3 to 1 million (January1, 1920), as the

aggregate population of Moscow and Leningrad shrankfrom over4 millionpeople in 1917 to a mere 1.6 million n 1920 (a decline of58.2 per cent).55National incomefell from 1 billionroublesin 1913to 8 billion n 1920 (a declineof 60 per cent).56 nflation,whichhadbeen brought bout57on the assumption hat it would be eventually

eliminatedtogetherwith money itself,had assumed enormouspro-portions.Therewere in 1921 2,547billion roubles in circulation om-

pared with43.7 billion in 1918 (both figures efer o July ),58 anda mere 19.6 billionon November1, 1917,at themoment f the Com-munistRevolution.59he latterfigures rove, ncidentally, hat War-Communismwas not forcedupon Lenin by inflation,s it is some-timesclaimed,butwas itself he cause of a run-away nflation, hichreached in 1922 the astronomical igure f 2,000,000billionroubles.60

52Lenin, ollectedWorks, thRussian dition, XXIII,p. 447.

δ3Μ.W. Kolganov,Narodnyokhod

SSR, Moscow,1940,p. 30; PoliticheskayaEkonomiya, chebnik,Moscow,1955,p. 331; Baykov, evelopmentftheSovietEconomic ustem, p. 8, 121,147ff.

^Foliticheskayakonomiya, chebnik,Moscow,1955,p. 331.55CompareBaykov,Developmentof the Soviet Economic System,p. 147;

Larin,WirtschaftslebenndWirtschaftlicherufbau, . 60; and S. Ν. Prokopovich,Russland' Volkswirtschaftnter en Soviets, urich,New York, 944,p. 12.

56D. . Chernomordiked.), Narodny okhod SSR, Moscow, 937,p. 15.57Between 917 and 1925,paper moneywas issued,notonlyby the Russian

government,ut also by over2,000 local authorities,ncluding 42 in Ukraine,325 in Northern aucasus,547 in Siberia,217 in Transcaucasus,35 in RussianCentralAsia,74 intheLeningradrea,etc.Compare . N. Prokopovich,arodnoeKhozaystvoSSSR, New York, 1952, II, p. 243. The over-all issue of this

do-it-yourselfcurrency as never eenascertained.58A.Zverev,n Finansv SSR za XXXlet, 1917-1947, Moscow,1947, p. 13.™Ibid.,p. 7.*°S„N-Prokopovich,arodnoeKhozaystvoSSR,p. 247.




It is obvious that these indices of economic contraction an to acertainextentbe blamed on the virtual state of war prevailingover

largepartsofthe Russianterritory,nd theembryonic tate ofRussianadministrativegencies of this early period.61However, it is alsoobvious that these histoncal circumstancesmerely aggravated theeffectsf somestructural evelopmentsmplied n theverytechniqueof the physical allocation or economic communism,developments,which were entirely verlookedby Marx and his firstRussian dis-ciples,and whichare stillbeing overlookedby his faithful ollowers.

War and the inexperience f the Russian revolutionariesn economicmattersby no means absolve Marx fromthe responsibility or thecollapse of the Russian economy duringthe early twenties,forthesimple reason that his economic programmewas- and is bound toremain- mpractical.

Marxwas wrong n assuming hat the economies ofthefuturehaveto choose between two pure allocation techniques: free exchange( Capitalism ) and physical allocation ( Communism ). He over-looked the possibilityof a wide range of controlsover exchange(direct controls or targeting n particular) and the possibilityof

various blendsof controlled xchangeand physicalallocation,thatis,the possibilities,which have resultedin a wide range of mixedeconomies of our day, and which can simplynot be pigeon-holedunderthe labels of either Capitalism or Communism. he presentSoviet economyconstitutes n example of such a mixedeconomy,whichwas notforeseen y Marx,and inwhichphysicalallocation hasbeen blended, both in industry nd in kolkhozes,with extensivelycontrolled xchange.This economy s, therefore, ot thepure or com-munisttype outlinedby Marx, and attemptedduringthe period ofWar-Communism.

Communism, resentedbyMarx

as the alter-nativesolutionto Capitalism, has proved to be no real alternativeat all.62

Russian leaders have been forcedto abandon the economic pro-eiThe State Planning Commission (the Gosplan) was set up only during the

last months of War-Communism (February 22, 1921). Local agencies of theVSNKh were either entirely absent or acted on their own initiative. Input-targeting, the only alternative to cost-planning under conditions of physicalallocation,was not even attempted, nd so forth.

e2Compare J. Stalin's admission What are the proletariatand its party to doin countries,our being a case in point, . . . where agriculture .. is divided up

among numerous small and medium owner-producersto such an extent as tomake it impossible to consider the expropriationof these producers? To thisquestionMarx) Engels*ormula oes notfurnishn answer, conomicProblemsofSocialismn theUSSR, Moscow, 952,p. 15.




grammeuggested yMarx, nd leadingSovieteconomistsre nowjoining heirWestern olleaguesn theirgeneral riticismf Marx'sover-optimisticssessmentftheprospectsfpurephysicalllocation.They recomingorealize hat heeconomydvocated yMarx an-notsuccessfullyompetewithmonetaryconomiesn respect o theover-all eductionfinputs erunitofoutput,nd the effectivenessofmaterialncentives,he twomainpre-conditionsf the ong-termincrease f labourproductivity.or example,K. Ostrovityanov,neminentoviet conomistnd theco-editor f therecent fficialext-

bookoneconomicsdmits hat it s impossibleoexpressnphysicalquantitiesheresults f theeconomic ctivityf a firms a whole;todetermineherentabilityfproduction;omeasure . . outlays fcapital nd labour i.e. inputs); nd to compare esults f ndividualfirmsnd ndustries. 63

This admission ppears indistinguishableromL. Mises*much-debated argument hat without ricingmechanism here is no(rational)economic alculation, 64nd W. Leontiev's emonstrationthat nover-allnput-targetingn ndustrysimpossible.65hisgeneralcriticismf the technique f physical llocationhas been recentlyextendedlso to twoparticularieldswhere his echnique as beenpredominant: ar^Communismndthe Soviet ollective arms.War-Communisms said to have failed to take into considerationheefficiencyfproduction,ustas it failedto consider costsof pro-ductionnd hence oregister rofitsnd losses. 66n collectivearms,costsof productionof differentperationss well as of theentireoutput ikewise an notbe determined,sincetheparticipationfpeasantsn toil,measured n labour-daynitsdoesnot end tself omonetarystimation,nd hencedoes not enter nto costsof pro-duction s a cost-item. 67he secondmaindrawback f

physicalallocation as been observedn thepoor ncentive rovided y anytype f ncome-in-kind.ccordingly,ar-Communisms criticizedorhaving ailed oprovide ufficientstimuli or he Russianworkers;68and thepresentrrangementf the abour-dayncomes-in-kindn col-lective armss also declared o hamperhe ncrease flabourpro-

wplanovoeKhozaustvo, oscow, 946,6, p. 62.e*F.A. Hayek ed.), Collectivistconomic hnninz,London, 935,p. 111.65Compare assily eontiev, tudies ntheStructurefthe American conomy:

TheoreticalndEmpiricalApplications fthe nput-Output nalt/sts.

e*Great ovietEncyclopaedia.ndedition.XI. p. 456.67S. Kobyzev,Bukhalt.uchetν sovkhozov,MTS i kolkhozov,Moscow,1946,p.326-9.

t&GreatovietEncyclopaedia, I,p. 456.




ductivityn thesefarms. 69hese two structural eaknesses f thetechnique f physical llocation-nd hence of Marx'spure com-munism-would ave led to thedeclineof War-Communismveniftherehad beenpeace in Russiaduring hisperiod, nd even ftheRussian conomy ad beensupported ya more ccomplishedetofadministrativegencies ndpractices romhevery eginningf thisexperiment.

It is significanthatnocontemporaryovietwriter asextolled hisstrange xperiment.ussian tudentsremerelynformedhat War-

Communism as inevitable nder certainhistorical ircumstancesand thatonce thesecircumstancesre overcome, the proletarianeconomyan do withoutobkhoditsa)War-Communism,s maybeseen from he exampleof the People's Democracies. 70hat theRussian conomy ouldhave beenbetter ffwithoutWar-Commun-ism appearsto be borne out by the fact that the SovietUnionregainedhe 1913 evelof ndustrialutput nly n 1926, hat s,nineyears fter he Bolshevik evolution,nd itspre-revolutionaryevelofpig-ironnd steeloutput 4.2 million ons71) s recentlys 1930,that s,thirteenears fter herevolution.

Communismeasedtobe a blueprintf Russian conomyn 1921,and our own descriptionf the present ovieteconomy s Com-munist r Marxianmerelyddsundeservedustre o thenameof amisleadinghinker hoseprogrammeas proved o be unworkable,andwhoseone-sidedriticalnterpretationf the surplus roduct 72is usedby demagoguess anintellectualeapon gainst ree ociety.7*

^SotsialisUcheskoeemledelie,Moscow,December28, 1952,p. 152. Comparealso Malenkov'sdiscussion f the progressive ystem f Kolkhoz ncome dis-tribution n hisReport o the 19thParti/ ongress.

™Politicheskayakonomiya,Uchebnik,Academyof

Sciences, SSSR, Moscow,1955,p. 331.71A.Chernyak, tempakh azvitiyaotsialisticheskoyromyshlennosti,oscow,

1948,pp. 40 and47; Baykov, evelopment ftheSovietEconomic ustem, . 121.72Compare talin's admission hat surplusproduct[is] the sole source of

accumulation n all socialformations. conomicProblems f Socialism, 952,p. 89.

73 Marx sed concepts categories)whichfully orrespondo capitalist ela-tions.But it is strange,o saythe east, o use theseconceptsnow and topastethem n artificiallyo oursocialist elations. Marxanalysed apitalismn orderto ... armtheworkinglass . . . with an intellectual eaponfortheoverthrowof capitalism. bid., p. 21. Consequently, avingdiscardedMarx as a con-structivehinker s far as their wn economic rganizations concerned, ussian

communistsontinue o cherishhis ideas for theirdestructiveffects n freesociety.

UniversityfBrítisholumbia.

ronimois - soviet experiment with communist economy 1918-20

Documents